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<ns0:Id>20250SB__107298AMD</ns0:Id>
<ns0:VersionNum>98</ns0:VersionNum>
<ns0:History>
<ns0:Action>
<ns0:ActionText>INTRODUCED</ns0:ActionText>
<ns0:ActionDate>2026-02-13</ns0:ActionDate>
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<ns0:Action>
<ns0:ActionText>AMENDED_SENATE</ns0:ActionText>
<ns0:ActionDate>2026-04-06</ns0:ActionDate>
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<ns0:SessionYear>2025</ns0:SessionYear>
<ns0:SessionNum>0</ns0:SessionNum>
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<ns0:MeasureNum>1072</ns0:MeasureNum>
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<ns0:AuthorText authorType="LEAD_AUTHOR">Introduced by Committee on Housing (Senators Arreguín (Chair), Cabaldon, Caballero, Cortese, Durazo, Gonzalez, Grayson, Ochoa Bogh, Padilla, and Seyarto)</ns0:AuthorText>
<ns0:Authors>
<ns0:Committee>
<ns0:Contribution>LEAD_AUTHOR</ns0:Contribution>
<ns0:House>SENATE</ns0:House>
<ns0:Name>Committee on Housing</ns0:Name>
<ns0:Members>Senators Arreguín (Chair), Cabaldon, Caballero, Cortese, Durazo, Gonzalez, Grayson, Ochoa Bogh, Padilla, and Seyarto</ns0:Members>
</ns0:Committee>
</ns0:Authors>
<ns0:Title> An act to amend Sections 65588, 65863.10, 65863.11, 65912.101, 65912.123, and 66300 of, and to repeal Section 65584.6 of, the Government Code, to amend Sections 50199.7, 50408, 50676, 50827, and 50828 of the Health and
Safety Code, and to amend Sections 12206, 17058, and 23610.5 of the Revenue and Taxation Code, relating to housing. </ns0:Title>
<ns0:RelatingClause>housing</ns0:RelatingClause>
<ns0:GeneralSubject>
<ns0:Subject>Housing omnibus.</ns0:Subject>
</ns0:GeneralSubject>
<ns0:DigestText>
<html:p>
(1)
<html:span class="EnSpace"/>
Existing law authorized the County of Napa, until June 30, 2007, to meet up to 15 percent of its existing share of the regional housing need for lower income households in a specified manner.
</html:p>
<html:p>This bill would repeal this expired authority.</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The Planning and Zoning Law requires each county and city to adopt a comprehensive, long-term general plan for the physical development of the county or city, which includes, among other mandatory elements, a housing element. That law requires each city, county, and city and county to revise its housing element as appropriate in accordance with a specific schedule. For subsequent revisions of the housing element after the 5th
revision, that law requires certain local governments to revise their housing elements at 5-year intervals, as specified.
</html:p>
<html:p>This bill would instead require the 8th revision of the housing elements for those local governments, previously at 5-year intervals for the 7th revision, to be due by June 30, 2032. The bill would also require, for the 9th and subsequent revisions of the housing elements for those local governments, to be due 18 months after adoption of every 2nd regional transportation plan update, as provided. By imposing additional duties on local governments, this bill would impose a state-mandated local program.</html:p>
<html:p>The Planning and Zoning Law requires all local governments within the regional jurisdiction of a metropolitan planning organization or a regional transportation planning agency that is both subject to the 5-year revision interval and that makes a specified election,
as provided, to adopt their next housing element revision no later than 18 months after adoption of the first regional transportation plan update following the election. That law also requires subsequent revisions for those local governments to be due 18 months after adoption of every 2nd regional transportation plan update, as provided.</html:p>
<html:p>This bill would remove those provisions. </html:p>
<html:p>The Planning and Zoning Law requires the owner of land on which an assisted housing development is located, at least 12 months prior to an anticipated date of termination of a subsidy contract, an expiration of rental restrictions, or a prepayment on an assisted housing development, to provide notice of the proposed change to each affected tenant household residing in the assisted housing development at the time the notice is provided and to the affected public entities. If the owner decides to terminate a
subsidy contract or prepay the mortgage pursuant to these provisions, or if the owner has an assisted housing development in which there will be the expiration of rental restrictions, existing law requires the owner to first give notice of the opportunity to specified entities. Existing law requires the Department of Housing and Community Development to monitor compliance with these provisions and provide a report to the Legislature, as prescribed, containing specified information. Existing law defines various terms for these purposes.</html:p>
<html:p>This bill would additionally require the owner to provide that notice to affected public entities, as defined. The bill would prescribe the process for serving the notice on a city, county, or city and county in which the assisted housing development is located, to the appropriate local public housing authority, if any, and the Department of Housing and Community Development. The bill would remove some of the
information required to be in the report from the department described above. The bill would also make technical changes to these provisions. </html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The Affordable Housing and High Road Jobs Act of 2022, until January 1, 2033, authorizes a development proponent to submit an application for a mixed-income housing development along a commercial corridor that satisfies specified site criteria, affordability criteria, and objective development standards, and deems a housing development that meets those requirements a use by right and subject to streamlined, ministerial review. The act includes allowable residential density in those objective development standards and allows a greater residential density for sites within a very low vehicle travel area, within one-half mile of a major transit stop, or within a campus development zone.
</html:p>
<html:p>This bill would make a technical change relative to the
objective standards and to the definition of “very low vehicle travel area” for purposes of the above-described provision.</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
The Housing Crisis Act of 2019 prohibits an affected county or affected city, as defined, from enacting a development policy, standard, or condition that would change the general plan land use designation, specific plan land use designation, or zoning of a parcel or parcels of property to a less intensive use below what was allowed under the land use designation and zoning ordinances of the affected county or affected city in effect on January 1, 2018. However, the act authorized the City of San Jose, until the date that the City of San Jose’s housing element update for the 6th cycle was due, to proactively change a zoning ordinance to a more intensive use and use the added capacity to subsequently change a zoning ordinance applicable to an eligible parcel, as defined, to a less intensive use as long as there is no net
loss in residential capacity.
</html:p>
<html:p>This bill would remove that expired authority.</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
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, in modified conformity with federal law, of state insurance, personal income, and corporation tax credit amounts to qualified low-income housing projects that have been allocated, or qualify for, a federal low-income housing tax credit and farmworker housing. Existing law defines “agricultural worker” or “farmworker” for these purposes to have the same meaning as “agricultural employee,” which is defined to mean one engaged in agriculture, as defined, and to exclude, among other persons, any person other than those employees excluded from the coverage under specified provisions of federal law.
</html:p>
<html:p>This bill would revise the definition of “agricultural worker” or “farmworker” to mean an individual who derives, or prior to retirement or disability derived, a substantial portion of their income as an agricultural employee, as specified. The bill would also conform state tax law to changes relating to low-income housing tax credits for buildings financed by tax-exempt bonds subject to volume cap made by the federal One Big Beautiful Bill Act. The bill would specify the amount of credit to the taxpayer for each year, as prescribed. The bill would also make technical changes and correct cross-references in these provisions.</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
Existing law designates the Department of Housing and Community Development as the state agency responsible for administering funds received by the state from the federal Housing Trust Fund pursuant to the Housing and Economic Recovery Act of 2008, and requires the department to submit an allocation plan for the distribution of those funds, as specified, to the Assembly Committee on Housing and Community Development and the Senate Transportation and Housing Committees.
</html:p>
<html:p>This bill would update the name of the Senate Housing Committee within these provisions.</html:p>
<html:p>Existing law requires the department to submit an annual report to the Governor and both houses of the Legislature on the operations and accomplishments during the previous fiscal year of the housing programs administered by the department, as specified. Existing law
requires that report to include an evaluation of any program established by the department to meet the legal requirements of the federal Housing Trust Fund program guidelines.</html:p>
<html:p>This bill would remove the requirement to include that evaluation in the report. </html:p>
<html:p>Existing law generally governs the state’s implementation of the federal State Community Development Block Grant Program. </html:p>
<html:p>This bill would make nonsubstantive, technical changes to those provisions. </html:p>
<html:p>
(7)
<html:span class="EnSpace"/>
The bill would include findings that changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities.
</html:p>
<html:p>
(8)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>This bill would provide that no reimbursement is required by this act for a specified reason.</html:p>
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<ns0:VoteRequired>MAJORITY</ns0:VoteRequired>
<ns0:Appropriation>NO</ns0:Appropriation>
<ns0:FiscalCommittee>YES</ns0:FiscalCommittee>
<ns0:LocalProgram>YES</ns0:LocalProgram>
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<ns0:ImmediateEffect>NO</ns0:ImmediateEffect>
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<ns0:Urgency>NO</ns0:Urgency>
<ns0:TaxLevy>NO</ns0:TaxLevy>
<ns0:Election>NO</ns0:Election>
<ns0:UsualCurrentExpenses>NO</ns0:UsualCurrentExpenses>
<ns0:BudgetBill>NO</ns0:BudgetBill>
<ns0:Prop25TrailerBill>NO</ns0:Prop25TrailerBill>
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</ns0:Description>
<ns0:Bill id="bill">
<ns0:Preamble>The people of the State of California do enact as follows:</ns0:Preamble>
<ns0:BillSection id="id_10A7473B-FCA3-4781-85F3-6F397E37394F">
<ns0:Num>SECTION 1.</ns0:Num>
<ns0:ActionLine action="IS_REPEALED" ns3:href="urn:caml:codes:GOV:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'TITLE'%20and%20caml%3ANum%3D'7.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'1.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'3.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'ARTICLE'%20and%20caml%3ANum%3D'10.6.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'65584.6.'%5D)" ns3:label="fractionType: LAW_SECTION" ns3:type="locator">
Section 65584.6 of the
<ns0:DocName>Government Code</ns0:DocName>
is repealed.
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<ns0:Num>SEC. 2.</ns0:Num>
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Section 65588 of the
<ns0:DocName>Government Code</ns0:DocName>
is amended to read:
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<ns0:Num>65588.</ns0:Num>
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<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
Each local government shall review its housing element as frequently as appropriate to evaluate all of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The appropriateness of the housing goals, objectives, and policies in contributing to the attainment of the state housing goal.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The effectiveness of the housing element in attainment of the community’s housing goals and objectives.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The progress of the city, county, or city and county in implementation of the housing element.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
The effectiveness of the housing element goals, policies, and related actions to meet the community’s needs,
pursuant to paragraph (7) of subdivision (a) of Section 65583.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
The housing element shall be revised as appropriate, but no less often than required by subdivision (e), to reflect the results of this periodic review. Nothing in this section shall be construed to excuse the obligations of the local government to adopt a revised housing element in accordance with the schedule specified in this section.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
The review and revision of housing elements required by this section shall take into account any low- or moderate-income housing provided or required pursuant to Section 65590.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
The review pursuant to subdivision (c) shall include, but need not be limited to, the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The number of new housing units approved for construction within the
coastal zone after January 1, 1982.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The number of housing units for persons and families of low or moderate income, as defined in Section 50093 of the Health and Safety Code, required to be provided in new housing developments either within the coastal zone or within three miles of the coastal zone pursuant to Section 65590.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The number of existing residential dwelling units occupied by persons and families of low or moderate income, as defined in Section 50093 of the Health and Safety Code, that have been authorized to be demolished or converted since January 1, 1982, in the coastal zone.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
The number of residential dwelling units for persons and families of low or moderate income, as defined in Section 50093 of the Health and Safety Code, that have been required for replacement or authorized to be
converted or demolished as identified in paragraph (3). The location of the replacement units, either onsite, elsewhere within the locality’s jurisdiction within the coastal zone, or within three miles of the coastal zone within the locality’s jurisdiction, shall be designated in the review.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
Each city, county, and city and county shall revise its housing element according to the following schedule:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
Local governments within the regional jurisdiction of the Southern California Association of Governments: June 30, 2006, for the fourth revision.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Local governments within the regional jurisdiction of the Association of Bay Area Governments: June 30, 2007, for the fourth revision.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
Local governments within the regional
jurisdiction of the Council of Fresno County Governments, the Kern County Council of Governments, and the Sacramento Area Council of Governments: June 30, 2002, for the third revision, and June 30, 2008, for the fourth revision.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
Local governments within the regional jurisdiction of the Association of Monterey Bay Area Governments: December 31, 2002, for the third revision, and June 30, 2009, for the fourth revision.
</html:p>
<html:p>
(E)
<html:span class="EnSpace"/>
Local governments within the regional jurisdiction of the San Diego Association of Governments: June 30, 2005, for the fourth revision.
</html:p>
<html:p>
(F)
<html:span class="EnSpace"/>
All other local governments: December 31, 2003, for the third revision, and June 30, 2009, for the fourth revision.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
All local governments within a metropolitan
planning organization in a region classified as nonattainment for one or more pollutants regulated by the federal Clean Air Act (42 U.S.C. Sec. 7401), except those within the regional jurisdiction of the San Diego Association of Governments, shall adopt the fifth revision of the housing element no later than 18 months after adoption of the first regional transportation plan to be adopted after September 30, 2010.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
(i)
<html:span class="EnSpace"/>
All local governments within the regional jurisdiction of the San Diego Association of Governments shall adopt the fifth revision of the housing element no later than 18 months after adoption of the first regional transportation plan update to be adopted after September 30, 2010.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Before or concurrent with the adoption of the fifth revision of the housing element, each local government within the regional jurisdiction of the San Diego
Association of Governments shall identify adequate sites in its inventory pursuant to Section 65583.2 or rezone adequate sites to accommodate a prorated portion of its share of the regional housing need for the projection period representing the period from July 1, 2010, to the deadline for housing element adoption described in clause (i).
</html:p>
<html:p>
(I)
<html:span class="EnSpace"/>
For the fifth revision, a local government within the jurisdiction of the San Diego Association of Governments that has not adopted a housing element for the fourth revision by January 1, 2009, shall revise its housing element not less than every four years, beginning on the date described in clause (i), in accordance with paragraph (4), unless the local government does both of the following:
</html:p>
<html:p>
(ia)
<html:span class="EnSpace"/>
Adopts a housing element for the fourth revision no later than March 31, 2010, that is in substantial compliance with this article.
</html:p>
<html:p>
(ib)
<html:span class="EnSpace"/>
Completes any rezoning contained in the housing element program for the fourth revision by June 30, 2010.
</html:p>
<html:p>
(II)
<html:span class="EnSpace"/>
A local government within the jurisdiction of the San Diego Association of Governments shall adopt the sixth revision of the housing element on or before April 30, 2021, using the final housing allocation adopted by the San Diego Association of Governments on or before November 1, 2019, although such action will not be carried out concurrently with adoption of an updated regional transportation plan and sustainable communities strategy.
</html:p>
<html:p>
(III)
<html:span class="EnSpace"/>
All local governments within the jurisdiction of the San Diego Association of Governments shall adopt the seventh revision of the housing element no later than 18 months after the San Diego Association of Governments adopts its first regional transportation plan
update in 2029.
</html:p>
<html:p>
(IV)
<html:span class="EnSpace"/>
For the eighth and subsequent revisions, a local government within the jurisdiction of the San Diego Association of Governments shall be subject to the dates described in clause (i), in accordance with paragraph (4).
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
All local governments within the regional jurisdiction of a metropolitan planning organization or a regional transportation planning agency that has made an election pursuant to subparagraph (M) of paragraph (2) of subdivision (b) of Section 65080 by June 1, 2009, shall adopt the fifth revision of the housing element no later than 18 months after adoption of the first regional transportation plan update following the election.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
All other local governments shall adopt the fifth revision of the housing element five years after the date specified in paragraph (1).
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Subsequent revisions of the housing element shall be due as follows:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
(i)
<html:span class="EnSpace"/>
Except as otherwise provided in clause (ii), for local governments described in subparagraphs (A), (B), and (C) of paragraph (2), 18 months after adoption of every second regional transportation plan update, provided that the deadline for adoption is no more than eight years later than the deadline for adoption of the previous eight-year housing element, or as otherwise provided in law.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Notwithstanding clause (i), for local governments described in subparagraphs (A) and (C) of paragraph (2) that are within the regional jurisdiction of the Southern California Association of Governments, except the County of Orange and all local governments within the County of Orange, the County of Riverside and all local
governments within the County of Riverside, the County of San Bernardino and all local governments within the County of San Bernardino, and the County of Ventura and all local governments within the County of Ventura, for the seventh revision and subsequent revisions of the housing element, 24 months after adoption of every second regional transportation plan update, or as otherwise provided in law.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
For all other local governments, previously at five-year intervals for the seventh revision, June 30, 2032, for the eighth revision. For the ninth and subsequent revisions, these local governments shall be subject to the dates described in clause (i) of subparagraph (A).
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
A local government that does not adopt a housing element
within 120 days of the applicable deadline described in subparagraph (A), (B), or (C) of paragraph (2) or subparagraph (A) or (C) of paragraph (3) shall revise its housing element not less than every four years until the due date for the sixth revision. The adoption of a sixth revision housing element that the department finds to be in substantial compliance with this article pursuant to Section 65585 shall be deemed to satisfy any obligation to adopt a four-year housing element, and a four-year housing element revision shall not be subsequently required.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The deadline for adoption of every four-year revision shall be the same as the deadline for adoption for other local governments within the region.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
(i)
<html:span class="EnSpace"/>
For the adoption of the sixth revision, a local government that does not adopt a housing element that the department has found to be in substantial
compliance with this article within 120 days of the applicable deadline described in subparagraph (A) or (C) of paragraph (3) shall comply with subparagraph (A) of paragraph (1) of subdivision (c) of Section 65583 and subdivision (c) of Section 65583.2 within one year of the statutory deadline to revise the housing element.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
For the adoption of the seventh and each subsequent revision, a local government shall comply with subparagraph (A) of paragraph (1) of subdivision (c) of Section 65583 and subdivision (c) of Section 65583.2 no later than one year from the statutory deadline in this section for adoption of the housing element unless the local government complies with all of the following:
</html:p>
<html:p>
(I)
<html:span class="EnSpace"/>
The local government submits a draft element or draft amendment to the department for review pursuant to paragraph (1) of subdivision (b) of Section 65585 at least 90 days before the
statutory deadline set forth in this section for adoption of the housing element.
</html:p>
<html:p>
(II)
<html:span class="EnSpace"/>
The local government receives from the department findings that the draft element or draft amendment substantially complies with this article pursuant to paragraph (3) of subdivision (b) of Section 65585 on or before the statutory deadline set forth in Section 65588 for adoption of the housing element.
</html:p>
<html:p>
(III)
<html:span class="EnSpace"/>
The local government adopts the draft element or draft amendment that the department found to substantially comply with this article no later than 120 days after the statutory deadline set forth in this section.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
If a jurisdiction subject to this subparagraph fails to complete the required rezoning within the time period required, the jurisdiction’s adopted housing element shall be subject to subdivision (i) of Section
65585.
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
A jurisdiction that adopts a housing element more than one year after the statutory deadline described in subparagraph (A) or (C) of paragraph (3) shall not be found in substantial compliance with this article until it has completed the rezoning required by subparagraph (A) of paragraph (1) of subdivision (c) of Section 65583 and subdivision (c) of Section 65583.2.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
The metropolitan planning organization or a regional transportation planning agency for a region that has an eight-year revision interval pursuant to paragraph (3) shall notify the department and the Department of Transportation in writing of the estimated adoption date for its next regional transportation plan update at least 12 months before the estimated adoption date. The Department of Transportation shall maintain and publish on its internet website a current schedule of the estimated regional
transportation plan adoption dates. The department shall maintain and publish on its internet website a current schedule of the estimated and actual housing element due dates. Each council of governments shall publish on its internet website the estimated and actual housing element due dates, as published by the department, for the jurisdictions within its region and shall send notice of these dates to interested parties. For purposes of determining the existing and projected need for housing within a region pursuant to Sections 65584 to 65584.07, inclusive, the date of the next scheduled revision of the housing element shall be deemed to be the estimated adoption date of the regional transportation plan update described in the notice provided to the Department of Transportation plus 18 months, provided that date is no more than eight years later than the deadline for adoption of the previous eight-year housing element.
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
The new projection
period shall begin on the date of December 31 or June 30 that most closely precedes the end of the previous projection period.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
For purposes of this article, the following terms have the following meanings:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
“Planning period” shall be the time period between the due date for one housing element and the due date for the next housing element for each revision according to the applicable schedule described in paragraphs (2) and (3) of subdivision (e).
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
“Projection period” shall be the time period for which the regional housing need is calculated.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
For purposes of this section, “regional transportation plan update” shall mean a regional transportation plan adopted to satisfy the requirements of subdivision (d) of Section
65080.
</html:p>
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<ns0:BillSection id="id_A244A9CE-86F5-4913-9834-A49C0F4AC2ED">
<ns0:Num>SEC. 3.</ns0:Num>
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Section 65863.10 of the
<ns0:DocName>Government Code</ns0:DocName>
is amended to read:
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<ns0:Fragment>
<ns0:LawSection id="id_A32A45B1-2294-4012-992C-7580B34BDA92">
<ns0:Num>65863.10.</ns0:Num>
<ns0:LawSectionVersion id="id_4593B4FE-168C-468A-BBBB-6AAE1F73DB56">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
As used in this section, the following terms have the following meanings:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
“Affected public entities” means the mayor of the city in which the assisted housing development is located, or, if located in an unincorporated area, the chair of the board of supervisors of the county; the appropriate local public housing authority, if any; and the Department of Housing and Community Development.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
“Affected tenant” means a tenant household residing in an assisted housing development, as defined in paragraph (3), at the time notice is required to be provided pursuant to this section, that benefits from the governmental assistance.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
“Assisted housing development” means a multifamily rental housing development of five or more units that receives governmental assistance under any of the following programs:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
New construction, substantial rehabilitation, moderate rehabilitation, property disposition, and loan management set-aside programs, or any other program providing project-based assistance, under Section 8 of the United States Housing Act of 1937, as amended (42 U.S.C. Sec. 1437f).
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The following federal programs:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
The Below-Market-Interest-Rate Program under Section 221(d)(3) of the National Housing Act (12 U.S.C. Sec. 1715
<html:i>l</html:i>
(d)(3) and (5)).
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Section 236 of the National Housing Act (12 U.S.C. Sec. 1715z-1).
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
Section 202 of the Housing Act of 1959 (12 U.S.C. Sec. 1701q).
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
Section 811 of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. Sec. 8013).
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
Programs for rent supplement assistance under Section 101 of the Housing and Urban Development Act of 1965, as amended (12 U.S.C. Sec. 1701s).
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
Programs under Sections 514, 515, 516, 521, 533, and 538 of the Housing Act of 1949, as amended (42 U.S.C. Sec. 1485).
</html:p>
<html:p>
(E)
<html:span class="EnSpace"/>
Section 42 of the Internal Revenue Code.
</html:p>
<html:p>
(F)
<html:span class="EnSpace"/>
Section 142(d) of the Internal Revenue Code or its predecessors (tax-exempt private activity mortgage revenue bonds).
</html:p>
<html:p>
(G)
<html:span class="EnSpace"/>
Section 147 of the Internal Revenue Code (Section 501(c)(3) bonds).
</html:p>
<html:p>
(H)
<html:span class="EnSpace"/>
Title I of the Housing and Community Development Act of 1974, as amended (Community Development Block Grant Program).
</html:p>
<html:p>
(I)
<html:span class="EnSpace"/>
Title II of the Cranston-Gonzalez National Affordable Housing Act of 1990, as amended (HOME Investment Partnership Program).
</html:p>
<html:p>
(J)
<html:span class="EnSpace"/>
Titles IV and V of the McKinney-Vento Homeless Assistance Act of 1987, as amended, including the Department of Housing and Urban Development’s Supportive Housing Program, Shelter Plus Care Program, and surplus federal property disposition program.
</html:p>
<html:p>
(K)
<html:span class="EnSpace"/>
Grants and loans made by the Department of Housing and Community Development, including the Rental Housing Construction
Program, CHRP-R, and other rental housing finance programs.
</html:p>
<html:p>
(L)
<html:span class="EnSpace"/>
Grants and loans made by the California Housing Finance Agency for rental housing.
</html:p>
<html:p>
(M)
<html:span class="EnSpace"/>
Chapter 1138 of the Statutes of 1987.
</html:p>
<html:p>
(N)
<html:span class="EnSpace"/>
The following assistance provided by counties or cities in exchange for restrictions on the maximum rents that may be charged for units within a multifamily rental housing development and on the maximum tenant income as a condition of eligibility for occupancy of the unit subject to the rent restriction, as reflected by a recorded agreement, or other legally enforceable agreement, with a county or city:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Loans or grants provided using tax increment financing pursuant to the Community Redevelopment Law (Part 1 (commencing with Section 33000) of Division 24 of
the Health and Safety Code).
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Local housing trust funds, as referred to in paragraph (3) of subdivision (a) of Section 50843 of the Health and Safety Code.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
The sale or lease of public property at or below market rates.
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
The granting of density bonuses, or concessions or incentives, including fee waivers, parking variances, or amendments to general plans, zoning, or redevelopment project area plans, pursuant to Chapter 4.3 (commencing with Section 65915).
</html:p>
<html:p>
(v)
<html:span class="EnSpace"/>
The Middle Class Housing Act of 2022 (Section 65852.24).
</html:p>
<html:p>
(vi)
<html:span class="EnSpace"/>
Streamlining assistance pursuant to the Affordable Housing and High Road Jobs Act of 2022 (Chapter 4.1 (commencing with Section 65912.100)).
</html:p>
<html:p>
(vii)
<html:span class="EnSpace"/>
Section 65913.4.
</html:p>
<html:p>
(viii)
<html:span class="EnSpace"/>
The Affordable Housing on Faith and Higher Education Lands Act of 2023 (Section 65913.16).
</html:p>
<html:p>Assistance pursuant to this subparagraph shall not include the use of tenant-based Housing Choice Vouchers (Section 8(o) of the United States Housing Act of 1937, 42 U.S.C. Sec. 1437f(o), excluding paragraph (13) relating to project-based assistance). Restrictions shall not include any rent control or rent stabilization ordinance imposed by a county, city, or city and county.</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
“City” means a general law city, a charter city, or a city and county.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
“Expiration of rental restrictions” means the expiration of rental restrictions for an assisted housing development described in paragraph (3)
unless the development has other recorded agreements restricting the rent to the same or lesser levels for at least 50 percent of the units or the same number of units under the rent restrictions prior to the expiration, whichever is greater.
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
“Low or moderate income” means having an income as defined in Section 50093 of the Health and Safety Code.
</html:p>
<html:p>
(7)
<html:span class="EnSpace"/>
“Owner” means an individual, corporation, association, partnership, joint venture, or business entity that holds title to the land on which an assisted housing development is located. If the assisted housing development is the subject of a leasehold interest, “owner” also means an individual, corporation, association, partnership, joint venture, or business entity that holds a leasehold interest in the assisted housing development, and the owner holding title to the land and the owner with a leasehold interest in the assisted
housing development shall be jointly responsible for compliance.
</html:p>
<html:p>
(8)
<html:span class="EnSpace"/>
“Prepayment” means the payment in full or refinancing of the federally insured or federally held mortgage indebtedness prior to its original maturity date, or the voluntary cancellation of mortgage insurance, on an assisted housing development described in paragraph (3) that would have the effect of removing the current rent or occupancy or rent and occupancy restrictions contained in the applicable laws and the regulatory agreement.
</html:p>
<html:p>
(9)
<html:span class="EnSpace"/>
“Termination” means the failure of an owner to extend or renew its participation in a federal, state, or local government subsidy program or private, nongovernmental subsidy program for an assisted housing development described in paragraph (3), either at or prior to the scheduled date of the expiration of the contract, that may result in an increase in tenant rents or a change
in the form of the subsidy from project-based to tenant-based.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
At least 12 months prior to the anticipated date of the termination of a subsidy contract, the expiration of rental restrictions, or prepayment on an assisted housing development, the owner shall provide a notice of the proposed change to each affected tenant household residing in the assisted housing development at the time the notice is provided and to the affected public entities. An owner who meets the requirements of Section 65863.13 shall be exempt from providing that notice. The notice shall contain all of the following:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
In the event of termination, a statement that the owner intends to terminate the subsidy contract or rental restrictions upon its expiration date, or the expiration date of any contract extension thereto.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
In the event of the expiration of rental restrictions, a statement that the restrictions will expire, and in the event of prepayment, termination, or the expiration of rental restrictions, whether the owner might increase rents during the 12 months following prepayment, termination, or the expiration of rental restrictions.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
In the event of prepayment, a statement that the owner intends to pay in full or refinance the federally insured or federally held mortgage indebtedness prior to its original maturity date, or voluntarily cancel the mortgage insurance.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
The anticipated date of the termination, prepayment of the federal or other program or expiration of rental restrictions, and the identity of the federal or other program described in subdivision (a).
</html:p>
<html:p>
(E)
<html:span class="EnSpace"/>
A statement that the proposed change would have the effect of removing the current low-income affordability restrictions in the applicable contract or regulatory agreement.
</html:p>
<html:p>
(F)
<html:span class="EnSpace"/>
A statement whether or not the applicable program allows the owner to elect to keep the housing in the program after the proposed termination or prepayment date and, if so, a statement as to whether the owner expects to elect to keep the housing in the program after such date if allowed.
</html:p>
<html:p>
(G)
<html:span class="EnSpace"/>
A statement whether other governmental assistance will be provided to tenants residing in the development at the time of the termination of the subsidy contract or prepayment.
</html:p>
<html:p>
(H)
<html:span class="EnSpace"/>
A statement that a subsequent notice of the proposed change, including anticipated changes in rents, if any, for the development, will be provided at least six
months prior to the anticipated date of termination of the subsidy contract, or expiration of rental restrictions, or prepayment.
</html:p>
<html:p>
(I)
<html:span class="EnSpace"/>
A statement that a copy of the notice of opportunity to submit an offer to purchase is attached to or included in the notice, is posted in the common area of the development, and has been sent to qualified entities, as required in Section 65863.11.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Notwithstanding paragraph (1), if an owner provides a copy of a federally
required notice of termination of a subsidy contract or prepayment at least 12 months prior to the proposed change to each affected tenant household residing in the assisted housing development at the time the notice is provided and to the affected public entities, the owner shall be deemed in compliance with this subdivision, if the notice is in compliance with all federal laws. However, the federally required notice does not satisfy the requirements of Section 65863.11.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
At least six months prior to the anticipated date of termination of a subsidy contract, expiration of rental restrictions or prepayment on an assisted housing development, the owner shall provide a notice of the proposed change to each affected tenant household residing in the assisted housing development at the time the notice is provided and to the affected public entities. An owner who meets the requirements of Section 65863.13 shall be exempt
from providing that notice.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The notice to the tenants shall contain all of the following:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
The anticipated date of the termination or prepayment of the federal or other program, or the expiration of rental restrictions, and the identity of the federal or other program, as described in subdivision (a).
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The current rent and rent anticipated for the unit during the 12 months immediately following the date of the prepayment or termination of the federal or other program, or expiration of rental restrictions.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
A statement that a copy of the notice will be sent to the city, county, or city and county, where the assisted housing development is located, to the appropriate local public housing authority, if any, and to the Department of Housing and
Community Development.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
A statement of the possibility that the housing may remain in the federal or other program after the proposed date of subsidy termination or prepayment if the owner elects to do so under the terms of the federal government’s or other program administrator’s offer or that a rent increase may not take place due to the expiration of rental restrictions.
</html:p>
<html:p>
(E)
<html:span class="EnSpace"/>
A statement of the owner’s intention to participate in any current replacement subsidy program made available to the affected tenants.
</html:p>
<html:p>
(F)
<html:span class="EnSpace"/>
A statement that the owner shall accept all enhanced Section 8 vouchers if the tenants receive them.
</html:p>
<html:p>
(G)
<html:span class="EnSpace"/>
The name and telephone number of the city, county, or city and county, the appropriate local public housing authority, if any, the
Department of Housing and Community Development, and a legal services organization, that can be contacted to request additional written information about an owner’s responsibilities and the rights and options of an affected tenant.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
In addition to the information provided in the notice to the affected tenant, the notice to the affected public entities shall contain information regarding the number of affected tenants in the project, the number of units that are government assisted and the type of assistance, the number of the units that are not government assisted, the number of bedrooms in each unit that is government assisted, and the ages and income of the affected tenants. The notice shall briefly describe the owner’s plans for the project, including any timetables or deadlines for actions to be taken and specific governmental approvals that are required to be obtained, the reason the owner seeks to terminate the subsidy contract or
prepay the mortgage, and any contacts the owner has made or is making with other governmental agencies or other interested parties in connection with the notice. The owner shall also attach a copy of any federally required notice of the termination of the subsidy contract or prepayment that was provided at least six months prior to the proposed change. The information contained in the notice shall be based on data that is reasonably available from existing written tenant and project records.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
The owner proposing the termination or prepayment of governmental assistance or the owner of an assisted housing development in which there will be the expiration of rental restrictions shall provide additional notice of any significant changes to the notice required by subdivision (c) within seven business days to each affected tenant household residing in the assisted housing development at the time the notice is provided and to the affected public
entities. “Significant changes” shall include, but not be limited to, any changes to the date of termination or prepayment, or expiration of rental restrictions or the anticipated new rent.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
An owner who is subject to the requirements of this section shall also provide a copy of any notices issued to existing tenants pursuant to subdivision (b), (c), or (d), or paragraph (2) of this subdivision, to any prospective tenant at the time the prospective tenant is interviewed for eligibility.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The owner of an assisted housing development that is three years from a scheduled expiration of rental restrictions or a scheduled termination of a subsidy contract shall also provide notice of the scheduled expiration of rental restrictions or a scheduled termination of a subsidy contract to existing tenants by posting the notice in an accessible location of the
property. The notice shall remain posted until the expiration of rental restrictions or the termination of a subsidy contract has occurred. This notice shall also be provided to affected public entities. This paragraph is applicable only to owners of assisted housing developments where the rental restrictions are scheduled to expire after January 1, 2021.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
This section shall not require the owner to obtain or acquire additional information that is not contained in the existing tenant and project records, or to update any information in the owner’s records. The owner shall not be held liable for any inaccuracies contained in these records or from other sources, nor shall the owner be liable to any party for providing this information.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
For purposes of this section, service of the notice to the affected tenants shall be made by first-class mail
postage prepaid.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
For purposes of this section, service of notice to the city, county, city and county, appropriate local public housing authority, if any, and the Department of Housing and Community Development shall be made by either first-class mail postage prepaid or electronically to any public entity that has provided an email address for that purpose.
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
Nothing in this section shall enlarge or diminish the authority, if any, that a city, county, city and county, affected tenant, or owner may have, independent of this section.
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
If, prior to January 1, 2001, the owner has already accepted a bona fide offer from a qualified entity, as defined in subdivision (c) of Section 65863.11, and has complied with this section as it existed prior to January 1, 2001, at the time the owner decides to sell or otherwise
dispose of the development, the owner shall be deemed in compliance with this section.
</html:p>
<html:p>
(j)
<html:span class="EnSpace"/>
Injunctive relief shall be available to any party identified in paragraph (1) or (2) of subdivision (a) who is aggrieved by a violation of this section, including, but not limited to, a group of affected tenants that meets the requirements of a legitimate tenant organization, as defined in federal regulations, or a tenant association, as defined in paragraph (4) of subdivision (a) of Section 65863.11. Injunctive relief pursuant to this subdivision may include, but is not limited to, reimposition of the prior restrictions until any required notice is provided and the required period has elapsed, and restitution of any rent increases collected without compliance with this section. In a judicial action brought pursuant to this subdivision, the court may award attorney’s fees and costs to a prevailing plaintiff.
</html:p>
<html:p>
(k)
<html:span class="EnSpace"/>
The Director of Housing and Community Development shall approve forms to be used by owners to comply with subdivisions (b), (c), and (e). Once the director has approved the forms, an owner shall use the approved forms to comply with subdivisions (b), (c), and (e).
</html:p>
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<ns0:Num>SEC. 4.</ns0:Num>
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Section 65863.11 of the
<ns0:DocName>Government Code</ns0:DocName>
is amended to read:
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<ns0:Fragment>
<ns0:LawSection id="id_9B089E3C-F8F6-4BCF-8EE3-3A9B92EDC317">
<ns0:Num>65863.11.</ns0:Num>
<ns0:LawSectionVersion id="id_49D404A6-8DD1-4BC0-A4B5-57E8AEFFABB8">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
Terms used in this section shall be defined as follows:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
“Assisted housing development” and “development” shall have the same meaning as in paragraph (3) of subdivision (a) of Section 65863.10.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
“Owner” shall have the same meaning as in paragraph (7) of subdivision (a) of Section 65863.10.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
“Tenant” means a tenant, subtenant, lessee, sublessee, or other person legally in possession or occupying the assisted housing development.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
“Tenant association” means a group of tenants who have formed a nonprofit corporation, cooperative corporation, or other
entity or organization, or a local nonprofit, regional, or national organization whose purpose includes the acquisition of an assisted housing development and that represents the interest of at least a majority of the tenants in the assisted housing development.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
“Low or moderate income” means having an income as defined in Section 50093 of the Health and Safety Code.
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
“Very low income” means having an income as defined in Section 50105 of the Health and Safety Code.
</html:p>
<html:p>
(7)
<html:span class="EnSpace"/>
“Local nonprofit organizations” means not-for-profit corporations organized pursuant to Division 2 (commencing with Section 5000) of Title 1 of the Corporations Code that have as their principal purpose the ownership, development, or management of housing or community development projects for persons and families of low or moderate income and
very low income, and which have a broadly representative board, a majority of whose members are community based and have a proven track record of local community service.
</html:p>
<html:p>
(8)
<html:span class="EnSpace"/>
“Local public agencies” means housing authorities, redevelopment agencies, or any other agency of a city, county, or city and county, whether general law or chartered, which are authorized to own, develop, or manage housing or community development projects for persons and families of low or moderate income and very low income.
</html:p>
<html:p>
(9)
<html:span class="EnSpace"/>
“Regional or national organizations” means not-for-profit, charitable corporations organized on a multicounty, state, or multistate basis that have as their principal purpose the ownership, development, or management of housing or community development projects for persons and families of low or moderate income and very low income and own and operate at least three comparable rent-
and income-restricted affordable rental properties governed under a regulatory agreement with a department or agency of the State of California or the United States, either directly or by serving as the managing general partner of limited partnerships or managing member of limited liability corporations.
</html:p>
<html:p>
(10)
<html:span class="EnSpace"/>
“Regional or national public agencies” means multicounty, state, or multistate agencies that are authorized to own, develop, or manage housing or community development projects for persons and families of low or moderate income and very low income and own and operate at least three comparable rent- and income-restricted affordable rental properties governed under a regulatory agreement with a department or agency of the State of California or the United States, either directly or by serving as the managing general partner of limited partnerships or managing member of limited liability corporations.
</html:p>
<html:p>
(11)
<html:span class="EnSpace"/>
“Use restriction” means any federal, state, or local statute, regulation, ordinance, or contract that, as a condition of receipt of any housing assistance, including a rental subsidy, mortgage subsidy, or mortgage insurance, to an assisted housing development, establishes maximum limitations on tenant income as a condition of eligibility for occupancy of the units within a development, imposes any restrictions on the maximum rents that could be charged for any of the units within a development; or requires that rents for any of the units within a development be reviewed by any governmental body or agency before the rents are implemented.
</html:p>
<html:p>
(12)
<html:span class="EnSpace"/>
“Profit-motivated housing organizations and individuals” means individuals or two or more persons organized pursuant to Division 1 (commencing with Section 100) of Title 1 of, Division 3 (commencing with Section 1200) of Title 1 of, or
Chapter 5 (commencing with Section 16100) of Title 2 of, the Corporations Code, that carry on as a business for profit and own and operate at least three comparable rent- and income-restricted affordable rental properties governed under a regulatory agreement with a department or agency of the State of California or the United States, either directly or by serving as the managing general partner of limited partnerships or managing member of limited liability corporations.
</html:p>
<html:p>
(13)
<html:span class="EnSpace"/>
“Department” means the Department of Housing and Community Development.
</html:p>
<html:p>
(14)
<html:span class="EnSpace"/>
“Offer to purchase” means an offer from a qualified or nonqualified entity that is nonbinding on the owner.
</html:p>
<html:p>
(15)
<html:span class="EnSpace"/>
“Expiration of rental restrictions” has the meaning given in paragraph (5) of subdivision (a) of Section 65863.10.
</html:p>
<html:p>
(16)
<html:span class="EnSpace"/>
“Qualified entity” means an entity that meets the requirements of subdivisions (d) and (e).
</html:p>
<html:p>
(17)
<html:span class="EnSpace"/>
“Affected public entities” has the same meaning as defined in Section 65863.10.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
An owner of an assisted housing development shall not terminate a subsidy contract or prepay the mortgage pursuant to Section 65863.10, unless the owner or its agent shall first have provided each of the entities listed in subdivision (d) an opportunity to submit an offer to purchase the development, in compliance with subdivisions (g) and (h). An owner of an assisted housing development in which there will be the expiration of rental restrictions shall also provide each of the entities listed in subdivision (d) an opportunity to
submit an offer to purchase the development, in compliance with subdivisions (g) and (h). An owner who meets the requirements of Section 65863.13 shall be exempt from this requirement.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
An owner of an assisted housing development shall not sell, or otherwise dispose of, the development at any time within the five years before the expiration of rental restrictions or at any time if the owner is eligible for prepayment or termination within five years unless the owner or its agent shall first have provided each of the entities listed in subdivision (d) an opportunity to submit an offer to purchase the development, in compliance with this section. An owner who meets the requirements of Section 65863.13 shall be exempt from this requirement.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
The entities to whom an opportunity to purchase shall be provided include only the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The tenant association of the development.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Local nonprofit organizations and public agencies.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Regional or national nonprofit organizations and regional or national public agencies.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
Profit-motivated housing organizations or individuals.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
For the purposes of this section, to qualify as a purchaser of an assisted housing development, an entity listed in subdivision (d) shall do all of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
Be certified by the department, based on demonstrated relevant prior experience in California and current capacity, as capable of operating the housing and related facilities for its remaining useful life, either by
itself or through a management agent. The department shall establish a process for certifying an entity meeting the requirements of subdivision (d) and maintain a list of entities that are certified, which list shall be updated at least annually.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Agree to obligate itself and any successors in interest to maintain the affordability of the assisted housing development for households of very low, low, or moderate income for either a 30-year period from the date that the purchaser took legal possession of the housing or the remaining term of the existing federal governmental assistance specified in subdivision (a) of Section 65863.10, whichever is greater. The development shall be continuously occupied in the approximate percentages that those households who have occupied that development on the date the owner gave notice of intent or the approximate percentages specified in existing use restrictions, whichever is higher. This obligation shall
be recorded before the close of escrow in the office of the county recorder of the county in which the development is located and shall contain a legal description of the property, indexed to the name of the owner as grantor. An owner that obligates itself to an enforceable regulatory agreement that will ensure for a period of not less than 30 years that rents for units occupied by low- and very low income households or that are vacant at the time of executing a purchase agreement will conform with restrictions imposed by Section 42(f) of the Internal Revenue Code shall be deemed in compliance with this paragraph. In addition, the regulatory agreement shall contain provisions requiring the renewal of rental subsidies, should they be available, provided that assistance is at a level to maintain the project’s fiscal viability.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Local nonprofit organizations and public agencies shall have no member among their officers or directorate with a
financial interest in assisted housing developments that have terminated a subsidy contract or prepaid a mortgage on the development without continuing the low-income restrictions.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
If an assisted housing development is not economically feasible, as determined by all entities with regulatory agreements and deed-restrictions on the development, a purchaser shall be entitled to remove one or more units from the rent and occupancy requirements as is necessary for the development to become economically feasible, provided that once the development is again economically feasible, the purchaser shall designate the next available units as low-income units up to the original number of those units.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
If an owner decides to terminate a subsidy contract, or prepay the mortgage pursuant to Section 65863.10, or sell or otherwise dispose of the assisted housing development pursuant to
subdivision (b) or (c), or if the owner has an assisted housing development in which there will be the expiration of rental restrictions, the owner shall first give notice of the opportunity to offer to purchase to
affected public entities, to each qualified entity on the list provided to the owner by the department, in accordance with subdivision (p), and to those qualified entities that directly contact the owner. A copy of this notice shall also be included or attached to the notice pursuant to subdivision (b) of Section 65863.10. The notice of the opportunity to offer to purchase must be given before or concurrently with the notice required pursuant to subdivision (b) of Section 65863.10 for a period of at least 12 months. The owner shall contact the department to obtain the list of qualified entities. The notice shall conform to the requirements of subdivision (h)
and shall be sent to the entities by registered or certified mail, return receipt requested. The owner shall also post a copy of the notice in a conspicuous place in the common area of the development.
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
The initial notice of a bona fide opportunity to submit an offer to purchase shall contain all of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
A statement addressing both of the following:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
Whether the owner intends to maintain the current number of affordable units and level of affordability.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Whether the owner has executed a contract or agreement of at least five years’ duration with a public entity to continue or replace subsidies to the property and to maintain an equal or greater number of units at an equal or deeper level of affordability and, if so, the length of
the contract or agreement.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
A statement that each of the type of entities listed in subdivision (d), or any combination of them, has the right to submit a bona fide offer to purchase the development under this section.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
Except as provided in subparagraph (B), a statement that the owner will make available to each of the types of entities listed in subdivision (d), within 15 business days of receiving a request therefor, that includes all of the following:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Itemized lists of monthly operating expenses for the property.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Capital improvements, as determined by the owner, made within each of the two preceding calendar years at the property.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
The
amount of project property reserves.
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
Copies of the two most recent financial and physical inspection reports on the property, if any, filed with a federal, state, or local agency.
</html:p>
<html:p>
(v)
<html:span class="EnSpace"/>
The most recent rent roll for the property listing the rent paid for each unit and the subsidy, if any, paid by a governmental agency as of the date the notice of offer to purchase was made pursuant to subdivision (g).
</html:p>
<html:p>
(vi)
<html:span class="EnSpace"/>
A statement of the vacancy rate at the property for each of the two preceding calendar years.
</html:p>
<html:p>
(vii)
<html:span class="EnSpace"/>
The terms of assumable financing, if any, the terms of the subsidy contract, if any, and proposed improvements to the property to be made by the owner in connection with the sale, if any.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Subparagraph (A) shall not apply if 25 percent or less of the units on the property are subject to affordability restrictions or a rent or mortgage subsidy contract.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
A corporation authorized pursuant to Section 52550 of the Health and Safety Code or a public entity may share information obtained pursuant to subparagraph (A) with other prospective purchasers, and shall not be required to sign a confidentiality agreement as a condition of receiving or sharing this information, provided that the information is used for the purpose of attempting to preserve the affordability of the property.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
A statement that the owner has satisfied all notice requirements pursuant to subdivision (b) of Section 65863.10, unless the notice of opportunity to submit an offer to purchase is delivered more than 12 months before the anticipated date of termination, prepayment, or
expiration of rental restrictions.
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
If a qualified entity elects to purchase an assisted housing development, it shall make a bona fide offer to purchase the development at the market value determined pursuant to subdivision (k), subject to the requirements of this subdivision. A qualified entity’s bona fide offer to purchase shall be submitted within 270 days of the owner’s notice of the opportunity to submit an offer pursuant to subdivision (g), identify whether it is a tenant association, nonprofit organization, public agency, or profit-motivated organizations or individuals, and certify, under penalty of perjury, that it is qualified pursuant to subdivision (e). If an owner has received a bona fide offer from one or more qualified entities within the first 270 days from the date of an owner’s bona fide notice of the opportunity to submit an offer to purchase, the owner shall notify the department of all such offers within 90 days and
either (1) accept a bona fide offer from a qualified entity to purchase and execute a purchase agreement, or (2) record a new regulatory agreement with a term of at least 30 years that, at a minimum, meets the criteria of subdivision (a) of Section 65863.13. Once a bona fide offer is made, the owner shall take all steps reasonably required to renew any expiring housing assistance contract, or extend any available subsidies or use restrictions, if feasible, before the effective date of any expiration or termination.
</html:p>
<html:p>
(j)
<html:span class="EnSpace"/>
The market value of the property shall be determined by negotiation and agreement between the parties. If the parties fail to reach an agreement regarding the market value, the market value shall be determined by an appraisal process initiated by the owner’s receipt of the bona fide offer, which shall specifically reference the appraisal process provided by this subdivision as the means for determining the final purchase price.
Either the owner or the qualified entity, or both, may request that the fair market value of the property’s highest and best use, based on current zoning, be determined by an independent appraiser qualified to perform multifamily housing appraisals, who shall be selected and paid by the requesting party. All appraisers shall possess qualifications equivalent to those required by the members of the Appraisal Institute and shall be certified by the department as having sufficient experience in appraising comparable rental properties in California. If the appraisals differ by less than 5 percent, the market value and sales price shall be set at the higher appraised value. If the appraisals differ by more than 5 percent, the parties may elect to have the appraisers negotiate a mutually agreeable market value and sales price, or to jointly select a third appraiser, whose determination of market value and the sales price shall be binding.
</html:p>
<html:p>
(k)
<html:span class="EnSpace"/>
If an
owner does not receive a bona fide offer from one or more qualified entities within the 270 days specified in subdivision (i), or if after the 270 days specified in subdivision (i) all bona fide offers are withdrawn, the owner may do any of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
Sell the property to any buyer.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Extend the affordability restrictions for any period of time.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Maintain ownership of the property and allow the expiration, termination, or prepayment to occur at the end of the notice periods specified in Section 65863.10.
</html:p>
<html:p>
(l)
<html:span class="EnSpace"/>
This section does not apply to any of the following: a government taking by eminent domain or negotiated purchase; a forced sale pursuant to a foreclosure; a transfer by gift, devise, or operation of law; a sale to a person who would be
included within the table of descent and distribution if there were to be a death intestate of an owner; or an owner who certifies, under penalty of perjury, the existence of a financial emergency during the period covered by the offer to purchase requiring immediate access to the proceeds of the sale of the development. The certification shall be made pursuant to subdivision (o).
</html:p>
<html:p>
(m)
<html:span class="EnSpace"/>
Prior to the close of escrow, an owner selling, leasing, or otherwise disposing of a development to a purchaser who does not qualify under subdivision (e) shall certify under penalty of perjury that the owner has complied with all provisions of this section and Section 65863.10. This certification shall be recorded and shall contain a legal description of the property,
shall be indexed to the name of the owner as grantor, and may be relied upon by good faith purchasers and encumbrances for value and without notice of a failure to comply with the provisions of this section.
</html:p>
<html:p>A person or entity acting solely in the capacity of an escrow agent for the transfer of real property subject to this section shall not be liable for any failure to comply with this section unless the escrow agent either had actual knowledge of the requirements of this section or acted contrary to written escrow instructions concerning the provisions of this section.</html:p>
<html:p>
(n)
<html:span class="EnSpace"/>
The department shall undertake the following responsibilities and duties:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
Maintain a form containing a summary of rights and obligations under this section and make that information available to owners of assisted housing developments as well as to tenant
associations, local nonprofit organizations, regional or national nonprofit organizations, public agencies, and other entities with an interest in preserving the state’s subsidized housing.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Compile, maintain, and update a list of entities in subdivision (d) that have either contacted the department with an expressed interest in purchasing a development in the subject area or have been identified by the department as potentially having an interest in participating in a right-of-first-refusal program. The department shall publicize the existence of the list statewide. Upon receipt of a notice of intent under Section 65863.10, the department shall make the list available to the owner proposing the termination, prepayment, or removal of governmental assistance or to the owner of an assisted housing development in which there will be the expiration of rental restrictions. If the department does not make the list available at any time, the owner
shall only be required to send a written copy of the opportunity to submit an offer to purchase notice to the qualified entities which directly contact the owner and to post a copy of the notice in the common area pursuant to subdivision (g).
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
Monitor compliance with this section and Sections 65863.10 and 65863.13 by owners of assisted housing developments and, notwithstanding Section 10231.5, provide a report to the Legislature, which may be combined with the report submitted pursuant to Section 50408 of the Health and Safety Code, on or before December 31 of each year, containing information for the previous fiscal year, except that the report due December 31, 2022, shall include information for the 18 months from January 1, 2021, to June 30, 2022, inclusive, that includes, but is not limited to, the following:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
The number of properties and rental
units subject to this section and Sections 65863.10 and 65863.13.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
The number of properties and units that did any of the following:
</html:p>
<html:p>
(I)
<html:span class="EnSpace"/>
Complied with the requirements of this section and Sections 65863.10 and 65863.13.
</html:p>
<html:p>
(II)
<html:span class="EnSpace"/>
Failed to comply with the requirements of this section and Sections 65863.10 and 65863.13.
</html:p>
<html:p>
(III)
<html:span class="EnSpace"/>
Were offered for sale and therefore subject to the purchase right provisions of this section.
</html:p>
<html:p>
(IV)
<html:span class="EnSpace"/>
Were offered for sale and complied with the purchase right provisions of this section and the outcomes of the purchase right actions, including whether the property changed hands, to whom, and with what impact on affordability protections.
</html:p>
<html:p>
(V)
<html:span class="EnSpace"/>
Were offered for sale and failed to comply with the purchase right provisions of this section, the reason for their failure to comply, and the impact of their failure to comply on the affordability protections and the tenants who were residing in the property at the time of the failure.
</html:p>
<html:p>
(VI)
<html:span class="EnSpace"/>
Claimed exemptions from the obligations of this section pursuant to Section 65863.13 by category of reason for exemption.
</html:p>
<html:p>
(VII)
<html:span class="EnSpace"/>
Claimed exemptions from the obligations of this section and lost affordability protections and the impact on the tenants of the loss of the affordability protections.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
To facilitate the department’s compliance monitoring, owners of assisted housing developments in which at least 5 percent of the units on the property are subject to affordability restrictions or a rent or mortgage subsidy contract shall certify compliance with this section and Sections 65863.10 and 65863.13 to the department annually, under penalty of perjury, in a form as required by the department.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
The department may request information, in a form prescribed by the department, from counties and cities that provide assistance to owners of projects as described in subparagraph (N) of paragraph (3) of subdivision (a) of Section 65863.10.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
The report required to be submitted pursuant to this paragraph shall be submitted in compliance with Section 9795.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
Refer violations of this section and Sections 65863.10 and 65863.13 to the Attorney General for appropriate enforcement action.
</html:p>
<html:p>
(o)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
The provisions of this section may be enforced either in law or in equity by any affected tenant, as defined in paragraph (2) of subdivision (a) of Section 65863.10, any qualified entity entitled to exercise the opportunity to purchase and right of first refusal under this section, a group of affected tenants that meets the requirements of a legitimate tenant organization, as defined in federal regulations, a tenant association, as defined in paragraph (4) of subdivision (a) of Section 65863.11, or any affected public entity that has been adversely affected by an owner’s failure to comply with this section. In any judicial action brought pursuant to this subdivision, the court may waive any bond requirement and may award attorney’s fees and costs to a prevailing
plaintiff.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
An owner may rely on the statements, claims, or representations of any person or entity that the person or entity is a qualified entity as specified in subdivision (d), unless the owner has actual knowledge that the purchaser is not a qualified entity.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
If the person or entity is not an entity as specified in subdivision (d), that fact, in the absence of actual knowledge as described in paragraph (2), shall not give rise to any claim against the owner for a violation of this section.
</html:p>
<html:p>
(p)
<html:span class="EnSpace"/>
It is the intent of the Legislature that the provisions of this section are in addition to, but not preemptive of, applicable federal laws governing the sale or other disposition of a development that would result in either (1) a discontinuance of its use as an assisted housing development or (2) the termination or
expiration of any low-income use restrictions that apply to the development.
</html:p>
<html:p>
(q)
<html:span class="EnSpace"/>
Except as provided in subparagraph (B) of paragraph (3) of subdivision (n), this section does not apply to either of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
An assisted housing development receiving government assistance as described in clauses (iv) to (viii), inclusive, of subparagraph (N) of paragraph (3) of subdivision (a) of Section 65863.10 in which 30 percent or less of the units are subject to affordability restrictions.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
An assisted housing development in which 30 percent or less of the units are subject to affordability restrictions that was developed in compliance with a local ordinance, charter amendment, specific plan, resolution, or other land use policy or regulation requiring that a housing development contain a fixed percentage of units
affordable to extremely low, very low, low-, or moderate-income households.
</html:p>
<html:p>
(r)
<html:span class="EnSpace"/>
The department shall comply with any obligations under this section through the use of standards, forms, and definitions adopted by the department. The department may review, adopt, amend, and repeal the standards, forms, or definitions to implement this section. Any standards, forms, or definitions adopted to implement this section shall not be subject to Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2.
</html:p>
<html:p>
(s)
<html:span class="EnSpace"/>
For purposes of this section, service of notice to the city, county, or city and county in which the assisted housing development is located, to the appropriate local public housing authority, if any, and the Department of Housing and Community Development shall be made by either
registered or certified mail, return receipt requested, or electronically to any public entity that has provided an email address for that purpose.
</html:p>
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<ns0:Num>SEC. 5.</ns0:Num>
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Section 65912.101 of the
<ns0:DocName>Government Code</ns0:DocName>
is amended to read:
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<ns0:Fragment>
<ns0:LawSection id="id_DF00C98C-38FD-475E-9147-2E4C2FA088C4">
<ns0:Num>65912.101.</ns0:Num>
<ns0:LawSectionVersion id="id_791BF2F5-4117-4A2E-B40E-36C46991FC2B">
<ns0:Content>
<html:p>For purposes of this chapter:</html:p>
<html:p>
(a)
<html:span class="EnSpace"/>
“Base units” has the same meaning as “total units” as defined in subparagraph (A) of paragraph (8) of subdivision (o) of Section 65915.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
“Campus development zone” means the set of parcels that are contained either wholly or partially within a one-half mile radius of a “main campus,” as defined by Section 94849 of the Education Code, of the University of California, the California State University, or the California Community Colleges.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
“Commercial corridor” means a street that is not a freeway and that has a right-of-way of at least 70 and not greater than 150 feet.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
“Development proponent” means a developer who submits a housing development project application to a local government under the streamlined, ministerial review process pursuant to this chapter.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
“Extremely low income faculty or staff” means an employee of the University of California, the California State University, or the California Community Colleges who satisfies the requirements of Section 50106 of the Health and Safety Code.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
“Extremely low income households” has the same meaning as defined in Section 50106 of the Health and Safety Code.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
“Freeway” has the same meaning as defined in Section 332 of the Vehicle Code, except it does not include the portion of a freeway that is an on ramp or off ramp that serves as a connector between the
freeway and other roadways that are not freeways.
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
“Health care expenditures” include contributions under Sections 501(c) or (d) or 401(a) of the Internal Revenue Code and payments toward “medical care” as defined under Section 213(d)(1) of the Internal Revenue Code.
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
“Housing development project” has the same meaning as defined in Section 65589.5.
</html:p>
<html:p>
(j)
<html:span class="EnSpace"/>
“Industrial use” means utilities, manufacturing, transportation storage and maintenance facilities, warehousing uses, and any other use that is a source that is subject to permitting by a district, as defined in Section 39025 of the Health and Safety Code, pursuant to Division 26 (commencing with Section 39000) of the Health and Safety Code or the federal Clean Air Act (42 U.S.C. Sec. 7401 et seq.). “Industrial use” does not include any of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
Power substations or utility conveyances such as power lines, broadband wires, and pipes.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
A use where the only source permitted by a district is an emergency backup generator.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Self-storage for the residents of a building.
</html:p>
<html:p>
(k)
<html:span class="EnSpace"/>
“Local affordable housing requirement” means either of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
A local government requirement, as a condition of development of residential units, that a housing development project include a certain percentage of units affordable to, and occupied by, extremely low, very low, lower, or moderate-income households as a condition of development of residential units.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
A local
government requirement allowing a housing development project to be a use by right if the project includes a certain percentage of units affordable to, and occupied by, extremely low, very low, lower, or moderate-income households as a condition of development of residential units.
</html:p>
<html:p>
(l)
<html:span class="EnSpace"/>
“Local government” means a city, including a charter city, a county, including a charter county, or a city and county, including a charter city and county.
</html:p>
<html:p>
(m)
<html:span class="EnSpace"/>
“Lower income faculty or staff” means an employee of the University of California, the California State University, or the California Community Colleges who satisfies the requirements of Section 50079.5 of the Health and Safety Code.
</html:p>
<html:p>
(n)
<html:span class="EnSpace"/>
“Lower income households” has the same meaning as defined in Section 50079.5 of the Health and Safety Code.
</html:p>
<html:p>
(o)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
“Lower income student” means any of the following:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
A student who has a household income and asset level that does not exceed either of the following:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
The level for Cal Grant A or Cal Grant B award recipients as set forth in subdivision (k) of Section 69432.7 of the Education Code.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
The level for the California College Promise Grant as set forth in clause (ii) of subparagraph (B) of paragraph (1) of subdivision (g) of Section 76300 of the Education Code.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
A student who otherwise qualifies for the California College Promise Grant as set forth in subparagraph (B) of paragraph (1) of subdivision (g) of Section 76300 of the Education Code.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
A student who qualifies for Federal Pell Grant financial aid pursuant to Section 1070a of Title 20 of the United States Code.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
A student who qualifies for an exemption from paying nonresident tuition pursuant to Section 68130.5 of the Education Code, provided that the student also meets income criteria in subparagraph (A) or (B).
</html:p>
<html:p>
(E)
<html:span class="EnSpace"/>
A graduate student with income and asset levels that would qualify for one or more of the benefits in subparagraphs (A) to (D), inclusive, as determined by the campus at which the student is enrolled.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The eligibility of a student to occupy a unit for lower income students under this subdivision shall be verified by an affidavit, award letter, or letter of eligibility demonstrating that the student is eligible for
financial aid, including an institutional grant or fee waiver, provided by the institution of higher education in which the student is enrolled, by the Student Aid Commission, or by the federal government.
</html:p>
<html:p>
(p)
<html:span class="EnSpace"/>
“Major transit stop” has the same meaning as defined in subdivision (b) of Section 21155 of the Public Resources Code.
</html:p>
<html:p>
(q)
<html:span class="EnSpace"/>
“Minimum efficiency reporting value” or “MERV” means the measurement scale developed by the American Society of Heating, Refrigerating and Air-Conditioning Engineers used to report the effectiveness of air filters.
</html:p>
<html:p>
(r)
<html:span class="EnSpace"/>
“Moderate-income households” means households of persons and families of moderate income, as defined in Section 50093 of the Health and Safety Code.
</html:p>
<html:p>
(s)
<html:span class="EnSpace"/>
“Multifamily” means a property with five or more housing
units for sale or for rent.
</html:p>
<html:p>
(t)
<html:span class="EnSpace"/>
“Neighborhood plan” means a specific plan adopted pursuant to Article 8 (commencing with Section 65450) of Chapter 3, an area plan, precise plan, community plan, urban village plan, or master plan. To qualify as a neighborhood plan, the plan must have been adopted by a local government before January 1, 2024, and within 25 years of the date that a development proponent submits an application pursuant to this chapter. A neighborhood plan does not include a community plan or plans where the cumulative area covered by the community plans in the jurisdiction is more than one-half of the area of the jurisdiction.
</html:p>
<html:p>
(u)
<html:span class="EnSpace"/>
“Principally permitted use” means a use that, as of January 1, 2023, or thereafter, may occupy more than one-third of the square footage of designated use on the site and does not require a conditional use permit, except that parking uses
are considered principally permitted whether or not they require a conditional use permit.
</html:p>
<html:p>
(v)
<html:span class="EnSpace"/>
“Regional mall” means a site that meets all of the following criteria on the date that a development proponent submits an application pursuant to this chapter:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The permitted uses on the site include at least 250,000 square feet of retail use.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
At least two-thirds of the permitted uses on the site are retail uses.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
At least two of the permitted retail uses on the site are at least 10,000 square feet.
</html:p>
<html:p>
(w)
<html:span class="EnSpace"/>
“Street” has the same meaning as defined in Section 590 of the Vehicle Code, and includes sidewalks, as defined in Section 555 of the Vehicle Code.
</html:p>
<html:p>
(x)
<html:span class="EnSpace"/>
“Urban uses” means any current or former residential, commercial, public institutional, public park that is surrounded by other urban uses, parking lot or structure, transit or transportation passenger facility, or retail use, or any combination of those uses.
</html:p>
<html:p>
(y)
<html:span class="EnSpace"/>
“Use by right” means a development project for which both of the following are true:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The development project is not subject to a conditional use permit, planned unit development permit, or any other discretionary local government approval, permit, or review process.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
No aspect of the development project, including any permits required for the development project, is a “project” for purposes of Division 13 (commencing with Section 21000) of the Public Resources Code.
</html:p>
<html:p>
(z)
<html:span class="EnSpace"/>
“Very low income faculty or staff” means an employee of the University of California, the California State University, or the California Community Colleges who satisfies the requirements of Section 50105 of the Health and Safety Code.
</html:p>
<html:p>
(aa)
<html:span class="EnSpace"/>
“Very low income households” has the same meaning as defined in Section 50105 of the Health and Safety Code.
</html:p>
<html:p>
(ab)
<html:span class="EnSpace"/>
“Very low vehicle travel area” has the same meaning as defined in paragraph (6) of subdivision
(b) of Section 65589.5.1.
</html:p>
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</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_A348B64D-5F98-4EB8-A5AF-6E996A8ED28D">
<ns0:Num>SEC. 6.</ns0:Num>
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Section 65912.123 of the
<ns0:DocName>Government Code</ns0:DocName>
is amended to read:
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<ns0:Fragment>
<ns0:LawSection id="id_35DA5C90-F8C7-4BE6-A16C-9917CED0FD3C">
<ns0:Num>65912.123.</ns0:Num>
<ns0:LawSectionVersion id="id_E3B87524-1492-41B4-912C-C87B8248A0D4">
<ns0:Content>
<html:p>A development project shall not be subject to the streamlined, ministerial review process provided by Section 65912.124 unless the development project meets all of the following objective development standards:</html:p>
<html:p>
(a)
<html:span class="EnSpace"/>
The development shall be a multifamily housing development project.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
The residential density for the development, prior to the award of any eligible density bonus pursuant to Section 65915, shall be determined as follows:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
In a metropolitan jurisdiction, as determined pursuant to subdivisions (d) and (e) of Section 65583.2, the allowable residential density for the development shall be the greater of the following:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
The maximum allowable residential density, as defined in paragraph (6) of subdivision (o) of Section 65915, allowed on the parcel by the local government.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
For sites of less than one acre in size, 30 units per acre.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
For sites of one acre in size or greater located on a commercial corridor of less than 100 feet in width, 40 units per acre.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
For sites of one acre in size or greater located on a commercial corridor of 100 feet in width or greater, 60 units per acre.
</html:p>
<html:p>
(E)
<html:span class="EnSpace"/>
Notwithstanding subparagraph (B), (C), or (D), for sites within a very low vehicle travel area, within one-half mile of a major transit stop, or within a campus development zone, 80 units per acre.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
In a jurisdiction that is not a metropolitan jurisdiction, as determined pursuant to subdivisions (d) and (e) of Section 65583.2, the allowable residential density for the development shall be the greater of the following:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
The maximum allowable residential density, as defined in paragraph (6) of subdivision (o) of Section 65915, allowed on the parcel by the local government.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
For sites of less than one acre in size, 20 units per acre.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
For sites of one acre in size or greater located on a commercial corridor of less than 100 feet in width, 30 units per acre.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
For sites of one acre in size or greater located on a commercial corridor of 100 feet in width or greater, 50 units
per acre.
</html:p>
<html:p>
(E)
<html:span class="EnSpace"/>
Notwithstanding subparagraph (B), (C), or (D), for sites within a very low vehicle travel area, within one-half mile of a major transit stop, or within a campus development zone, 70 units per acre.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
For a housing development project application that has been determined to be consistent with the objective planning standards specified in this article, pursuant to subdivision (a) of Section 65912.124, before January 1, 2027, the development project shall be developed at a density as follows:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Except as provided in clause (ii), 50 percent or greater of the applicable allowable residential density contained in subparagraphs (B) to (E), inclusive, of paragraph (1) or subparagraphs (B) to (E), inclusive, of paragraph (2), as applicable.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
For a site within one-half mile of an existing passenger rail or bus rapid transit station, 75 percent or greater of the applicable allowable residential density contained in subparagraphs (B) to (E), inclusive, of paragraph (1) or subparagraphs (B) to (E), inclusive, of paragraph (2), as applicable.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
For a site within a campus development zone, 75 percent or greater of the applicable allowable residential density contained in subparagraph (E) of paragraph (2).
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
For a housing development project application that has been determined to be consistent with the objective planning standards specified in this article, pursuant to subdivision (a) of Section 65912.124, on or after January 1, 2027, the development project shall be developed at a density that is 75 percent or greater of the applicable allowable
residential density contained in subparagraphs (B) to (E), inclusive, of paragraph (1) or subparagraphs (B) to (E), inclusive, of paragraph (2), as applicable.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
Notwithstanding paragraphs (1) and (2), a development project shall not be subject to any density limitation if the development project is a conversion of existing buildings into residential use, unless the development project includes additional new square footage that is more than 20 percent of the overall square footage of the project.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
The height limit applicable to the housing development shall be the greater of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The height allowed on the parcel by the local government.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
For sites on a commercial corridor of less than 100 feet in width, 35 feet.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
For sites on a commercial corridor of 100 feet in width or greater, 45 feet.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
Notwithstanding paragraphs (2) and (3), 65 feet for sites that meet all of the following criteria:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
They are within one-half mile of a major transit stop.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
They are within a city with a population of greater than 100,000.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
They are not within a coastal zone, as defined in Division 20 (commencing with Section 30000) of the Public Resources Code.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
For sites in a campus development zone, either of the following:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
Forty-five feet, if not located in a metropolitan
jurisdiction, as determined pursuant to subdivisions (d) and (e) of Section 65583.2.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Sixty-five feet, if located in a metropolitan jurisdiction, as determined pursuant to subdivisions (d) and (e) of Section 65583.2.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
The development project meets the following standards:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
For the portion of the property that fronts a commercial corridor or for a property in a campus development zone, the following shall occur:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
No setbacks shall be required.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
All aboveground parking must be
set back at least 25 feet.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
On the ground floor, a building or buildings must abut within 10 feet of the street for at least 80 percent of the frontage.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
For the portion of the property that abuts an adjoining property that also abuts the same commercial corridor as the property, no setbacks are required unless the adjoining property contains a residential use that was constructed prior to the enactment of this chapter, in which case the requirements of subparagraph (A) of paragraph (3) apply.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
For the portion of the property line that does not abut or lie within a commercial corridor, or an adjoining property that also abuts the same commercial corridor as the property, the following shall occur:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
Along property lines that abut a property
that contains a residential use, the following shall occur:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
The ground floor of the development project shall be set back at 10 feet. The amount required to be set back may be decreased by the local government.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Starting with the second floor of the property, each subsequent floor of the development project shall be stepped back in an amount equal to seven feet multiplied by the floor number. For purposes of this paragraph, the ground floor counts as the first floor. The amount required to be stepped back may be decreased by the local government.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Along property lines that abut a property that does not contain a residential use, the development shall be set back 15 feet. The amount required to be stepped back may be decreased by the local government.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
For a development project at a regional mall, all of the following requirements apply:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
The average size of a block shall not exceed three acres. For purposes of this subparagraph, a “block” means an area fully surrounded by streets, pedestrian paths, or a combination of streets and pedestrian paths that are each at least 40 feet in width.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
At least 5 percent of the site shall be dedicated to open space.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
For the portion of the property that fronts a street that is newly created by the project and is not a commercial corridor, a building shall abut within 10 feet of the street for at least 60 percent of the frontage.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
No parking shall be required, including replacement parking, except that this article shall not reduce,
eliminate, or preclude the enforcement of any requirement imposed on a new multifamily residential or nonresidential development to provide bicycle parking, electric vehicle supply equipment installed parking spaces, or parking spaces that are accessible to persons with disabilities that would have otherwise applied to the development if this article did not apply.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
For any housing on the site located within 500 feet of a freeway, all of the following shall apply:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The building shall have a centralized heating, ventilation, and air-conditioning system.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The outdoor air intakes for the heating, ventilation, and air-conditioning system shall face away from the freeway.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The building shall provide air filtration media for outside and return air
that provide a minimum efficiency reporting value of 16.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
The air filtration media shall be replaced at the manufacturer’s designated interval.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
The building shall not have any balconies facing the freeway.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
None of the housing on the site is located within 3,200 feet of a facility that actively extracts or refines oil or natural gas.
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
The development proponent shall provide written notice of the pending application to each commercial tenant on the parcel when the application is submitted.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The development proponent shall provide relocation assistance to each eligible commercial tenant located on the site as follows:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
For a commercial tenant operating on the site for at least one year but less than five years, the relocation assistance shall be equivalent to six months’ rent.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
For a commercial tenant operating on the site for at least 5 years but less than 10 years, the relocation assistance shall be equivalent to nine months’ rent.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
For a commercial tenant operating on the site for at least 10 years but less than 15 years, the relocation assistance shall be equivalent to 12 months’ rent.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
For a commercial tenant operating on the site for at least 15 years but less than 20 years, the relocation assistance shall be equivalent to 15 months’ rent.
</html:p>
<html:p>
(E)
<html:span class="EnSpace"/>
For a commercial tenant operating on the site
for at least 20 years, the relocation assistance shall be equivalent to 18 months’ rent.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The relocation assistance shall be provided to an eligible commercial tenant upon expiration of the lease of that commercial tenant.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
For purposes of this subdivision, a commercial tenant is eligible for relocation assistance if the commercial tenant meets all of the following criteria:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
The commercial tenant is an independently owned and operated business with its principal office located in the county in which the property on the site that is leased by the commercial tenant is located.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The commercial tenant’s lease expired and was not renewed by the property owner.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
The commercial
tenant’s lease expired within the three years following the development proponent’s submission of the application for a housing development pursuant to this article.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
The commercial tenant employs 20 or fewer employees and has annual average gross receipts under one million dollars ($1,000,000) for the three-taxable-year period ending with the taxable year that precedes the expiration of their lease.
</html:p>
<html:p>
(E)
<html:span class="EnSpace"/>
The commercial tenant is still in operation on the site at the time of the expiration of its lease.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
Notwithstanding paragraph (4), for purposes of this subdivision, a commercial tenant is ineligible for relocation assistance if the commercial tenant meets both of the following criteria:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
The commercial tenant entered into a lease on the site
after the development proponent’s submission of the application for a housing development pursuant to this article.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The commercial tenant had not previously entered into a lease on the site.
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
The commercial tenant shall utilize the funds provided by the development proponent to relocate the business or for costs of a new business.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Notwithstanding paragraph (2), if the commercial tenant elects not to use the funds provided as required by subparagraph (A), the development proponent shall provide only assistance equal to three months’ rent, regardless of the duration of the commercial tenant’s lease.
</html:p>
<html:p>
(7)
<html:span class="EnSpace"/>
For purposes of this subdivision, monthly rent is equal to one-twelfth of the total amount of rent paid by the
commercial tenant in the last 12 months.
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
For any project that is the conversion of an existing building for nonresidential use building to residential use, the local government shall not require the provision of common open space beyond what is required for the existing project site.
</html:p>
<html:p>
(j)
<html:span class="EnSpace"/>
Objective zoning standards, objective subdivision standards, and objective design review standards not specified elsewhere in this section, as follows:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The applicable objective standards shall be those for the closest zone in the city, county, or city and county that allows multifamily residential use at the residential density proposed by the project. If no zone exists that allows the residential density proposed by the project, the applicable objective standards shall be those for the zone that allows the greatest density
within the city, county, or city and county.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The applicable objective standards shall be those in effect at the time that the development application is submitted to the local government pursuant to this article.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The objective standards shall not preclude a development from being built at the residential density required pursuant to subdivision (b) and shall not require the development to reduce unit size to meet the objective standards.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
The applicable objective standards may include a requirement that up to one-half of the ground floor of the housing development project be dedicated to retail use.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
For purposes of this section, “objective zoning standards,” “objective subdivision standards,” and “objective design review standards” mean
standards that involve no personal or subjective judgment by a public official and are uniformly verifiable by reference to an external and uniform benchmark or criterion available and knowable by both the development applicant or proponent and the public official before submittal. These standards may be embodied in alternative objective land use specifications adopted by a city or county, and may include, but are not limited to, housing overlay zones, specific plans, inclusionary zoning ordinances, and density bonus ordinances. In the event that objective zoning, general plan, subdivision, or design review standards are mutually inconsistent, a development shall be deemed consistent with the objective zoning and subdivision standards pursuant to this subdivision if the development is consistent with the standards set forth in the general plan.
</html:p>
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</ns0:BillSection>
<ns0:BillSection id="id_E618A16C-B75F-4DF3-B145-8105D2810912">
<ns0:Num>SEC. 7.</ns0:Num>
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Section 66300 of the
<ns0:DocName>Government Code</ns0:DocName>
is amended to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_D17DDC21-E4D9-4CF2-B342-F8A062F7DBDD">
<ns0:Num>66300.</ns0:Num>
<ns0:LawSectionVersion id="id_E9B7299A-6314-460F-ADE0-8F52C345E0F2">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
As used in this article, the following definitions shall apply:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
Except as otherwise provided in subparagraph (B), “affected city” means a city, including a charter city, that the Department of Housing and Community Development determines, pursuant to subdivision (d), is in an urbanized area or urban cluster, as designated by the United States Census Bureau.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Notwithstanding subparagraph (A), “affected city” does not include any city that has a population of 5,000 or less and is not located within an urbanized area, as designated by the United States Census Bureau.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
“Affected county” means a
census-designated place, based on the 2013-2017 American Community Survey 5-year Estimates, that is wholly located within the boundaries of an urbanized area, as designated by the United States Census Bureau.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Notwithstanding any other law, “affected county” and “affected city” includes the electorate of an affected county or city exercising its local initiative or referendum power, whether that power is derived from the California Constitution, statute, or the charter or ordinances of the affected county or city.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
“Department” means the Department of Housing and Community Development.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
“Development policy, standard, or condition” means any of the following:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
A provision of, or amendment to, a general plan.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
A provision of, or amendment to, a specific plan.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
A provision of, or amendment to, a zoning ordinance.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
A subdivision standard or criterion.
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
“Housing development project” has the same meaning as defined in paragraph (3) of subdivision (b) of Section 65905.5.
</html:p>
<html:p>
(7)
<html:span class="EnSpace"/>
“Objective design standard” means a design standard that involves no personal or subjective judgment by a public official and is uniformly verifiable by reference to an external and uniform benchmark or criterion available and knowable by both the development applicant or proponent and the public official before submittal of an application.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
Notwithstanding any other law except as provided in subdivision (h), with respect to land where housing is an allowable use, an affected county or an affected city shall not enact a development policy, standard, or condition that would have any of the following effects:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
Changing the general plan land use designation, specific plan land use designation, or zoning of a parcel or parcels of property to a less intensive use or reducing the intensity of land use within an existing general plan land use designation, specific plan land use designation, or zoning district in effect at the time of the proposed change, below what was allowed under the land use designation or zoning ordinances of the affected county or affected city, as applicable, as in effect on January 1, 2018, except as otherwise provided in clause (ii) of subparagraph (B) or subdivision (h). For purposes of this subparagraph, “reducing the intensity of land use”
includes, but is not limited to, reductions to height, density, or floor area ratio, new or increased open space or lot size requirements, new or increased setback requirements, minimum frontage requirements, or maximum lot coverage limitations, or any other action that would individually or cumulatively reduce the site’s residential development capacity.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
(i)
<html:span class="EnSpace"/>
Imposing a moratorium or similar restriction or limitation on housing development, including mixed-use development, within all or a portion of the jurisdiction of the affected county or city, other than to specifically protect against an imminent threat to the health and safety of persons residing in, or within the immediate vicinity of, the area subject to the moratorium or for projects specifically identified as existing restricted affordable housing.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
The affected county or affected city, as
applicable, shall not enforce a zoning ordinance imposing a moratorium or other similar restriction on or limitation of housing development until it has submitted the ordinance to, and received approval from, the department. The department shall approve a zoning ordinance submitted to it pursuant to this subparagraph only if it determines that the zoning ordinance satisfies the requirements of this subparagraph. If the department denies approval of a zoning ordinance imposing a moratorium or similar restriction or limitation on housing development as inconsistent with this subparagraph, that ordinance shall be deemed void.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
Imposing or enforcing design standards established on or after January 1, 2020, that are not objective design standards.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
Except as provided in subparagraph (E), establishing or implementing any provision that:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Limits the number of land use approvals or permits necessary for the approval and construction of housing that will be issued or allocated within all or a portion of the affected county or affected city, as applicable.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Acts as a cap on the number of housing units that can be approved or constructed either annually or for some other time period.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
Limits the population of the affected county or affected city, as applicable.
</html:p>
<html:p>
(E)
<html:span class="EnSpace"/>
Notwithstanding subparagraph (D), an affected county or affected city may enforce a limit on the number of approvals or permits or a cap on the number of housing units that can be approved or constructed if the provision of law imposing the limit was approved by voters prior to January 1, 2005, and the affected county or
affected city is located in a predominantly agricultural county. For the purposes of this subparagraph, “predominantly agricultural county” means a county that meets both of the following, as determined by the most recent California Farmland Conversion Report produced by the Department of Conservation:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Has more than 550,000 acres of agricultural land.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
At least one-half of the county area is agricultural land.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Any development policy, standard, or condition enacted on or after the effective date of this section that does not comply with this section shall be deemed void.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
Notwithstanding subdivisions (b) and (e), an affected county or affected city may enact a development policy, standard, or condition to prohibit the commercial use of
land that is designated for residential use, including, but not limited to, short-term occupancy of a residence, consistent with the authority conferred on the county or city by other law.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
The Department of Housing and Community Development shall determine those cities and counties in this state that are affected cities and affected counties, in accordance with subdivision (a) by June 30, 2020. The department may update the list of affected cities and affected counties once on or after January 1, 2021, and once on or after January 1, 2025, to account for changes in urbanized areas or urban clusters due to new data obtained from the 2020 census. The department’s determination shall remain valid until January 1, 2030.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
Except as provided in paragraphs (3) and (4) and subdivisions (g) and (h), this section shall prevail over any conflicting provision
of this title or other law regulating housing development in this state to the extent that this section more fully advances the intent specified in paragraph (2).
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
It is the intent of the Legislature that this section be broadly construed so as to maximize the development of housing within this state. Any exception to the requirements of this section, including an exception for the health and safety of occupants of a housing development project, shall be construed narrowly.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
This section shall not be construed as prohibiting the adoption or amendment of a development policy, standard, or condition in a manner that:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
Allows greater density.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Facilitates the development of housing.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
Reduces the costs to a housing development project.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
Imposes or implements mitigation measures as necessary to comply with the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code).
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
This section shall not apply to a housing development project located within a very high fire hazard severity zone. For purposes of this paragraph, “very high fire hazard severity zone” has the same meaning as provided in Section 51177.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
This section shall not be construed to void a height limit, urban growth boundary, or urban limit established by the electorate of an affected county or an affected city, provided that the height limit, urban growth boundary, or urban limit complies with subparagraph (A) of paragraph (1) of subdivision (b).
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
Nothing in this section supersedes, limits, or otherwise modifies the requirements of, or the standards of review pursuant to, Division 13 (commencing with Section 21000) of the Public Resources Code.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Nothing in this section supersedes, limits, or otherwise modifies the requirements of the California Coastal Act of 1976 (Division 20 (commencing with Section 30000) of the Public Resources Code). For a housing development project proposed within the coastal zone, nothing in this section shall be construed to prohibit an affected county or an affected city from enacting a development policy, standard, or condition necessary to implement or amend a certified local coastal program consistent with the California Coastal Act of 1976 (Division 20 (commencing with Section 30000) of the Public Resources Code).
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
This section does not prohibit an affected county or an affected city, including the local electorate acting through the initiative process, from changing a land use designation or zoning ordinance to a less intensive use, or reducing the intensity of land use, if the city or county concurrently changes the development standards, policies, and conditions applicable to other parcels within the jurisdiction to ensure that there is no net loss in residential capacity.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
For purposes of this subdivision, “concurrently” means the action is approved at the same meeting of the legislative body.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Notwithstanding subparagraph (A), if the action that would result in a net loss of residential capacity is requested by an applicant for a housing development project,
“concurrently” means within 180 days.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
Notwithstanding subparagraph (A), in the case of an initiative measure, “concurrently” means the action is included in the initiative in a manner that ensures the added residential capacity is effective at the same time as the reduction in residential capacity.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
This section does not prohibit an affected county or an affected city from changing a land use designation or zoning ordinance to a less intensive use on a site that is a mobilehome park, as defined in Section 18214 of the Health and Safety Code, as of the effective date of this section, and the no net loss requirement in paragraph (1) shall not apply.
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Notwithstanding subdivisions (b) and (e), this section does not prohibit an affected city or an affected county from enacting a development policy, standard, or condition that is intended to preserve or facilitate the production of housing for lower income households, as defined in Section 50079.5 of the Health and Safety Code, or housing types that traditionally serve lower income households, including mobilehome parks,
single-room occupancy units, or units subject to any form of rent or price control through a public entity’s valid exercise of its police power.
</html:p>
<html:p>
(j)
<html:span class="EnSpace"/>
The amendments to subparagraph (A) of paragraph (1) of subdivision (b), and to paragraph (1) of subdivision (h) made by the act adding this subdivision do not constitute a change in, but are declaratory of, existing law.
</html:p>
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</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_24508410-7A92-4623-B605-E06D941DD4E9">
<ns0:Num>SEC. 8.</ns0:Num>
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Section 50199.7 of the
<ns0:DocName>Health and Safety Code</ns0:DocName>
is amended to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_342FA14A-0E23-40AB-8E7F-7648C3746B27">
<ns0:Num>50199.7.</ns0:Num>
<ns0:LawSectionVersion id="id_1295D521-A85A-431E-8A50-4D1BEC9046A6">
<ns0:Content>
<html:p>As used in this chapter:</html:p>
<html:p>
(a)
<html:span class="EnSpace"/>
“Committee” means the Mortgage Bond and Tax Credit Allocation Committee, which is renamed the California Tax Credit Allocation Committee. All references to “committee” shall mean the California Tax Credit Allocation Committee.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
“Household” has the same meaning as defined in Section 7602 of Title 25 of the California Code of Regulations.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
“Housing credit” means the tax credit for low-income rental housing provided under Section 42 of the federal Internal Revenue Code (26 U.S.C. Sec. 42).
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
“Housing credit applicant” means any owner, sponsor, or developer
of a qualifying low-income building or project who applies to the committee for either of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
An allocation of a portion of the current state housing credit ceiling.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
A reservation of a portion of the anticipated state housing credit ceiling of a subsequent year.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
“Housing credit ceiling” means the amount specified in Section 42(h)(3)(C) of the federal Internal Revenue Code (26 U.S.C. Sec. 42(h)(3)(C)).
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
“Qualified low-income building” or “project” has the meaning specified in Section 42(c)(2) of the federal Internal Revenue Code (26 U.S.C. Sec. 42(c)(2)).
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
“Agricultural worker” or “farmworker”
means an individual who derives, or prior to retirement or disability derived, a substantial portion of their income as an agricultural employee, as that term is defined in subdivision (b) of Section 1140.4 of the Labor Code.
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
Before January 1, 2018, “farmworker housing” means housing for agricultural workers that is available to, and occupied by, only farmworkers and their households. The committee may permit an owner to temporarily house nonfarmworkers in vacant units in the event of a disaster or other critical occurrence. However, such emergency shelter shall only be permitted if there are no pending qualified farmworker household applications for residency.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
On and after January 1, 2018, “farmworker housing” means housing in which at least 50 percent of the units are available to, and occupied by, farmworkers and their households. The committee may permit an owner to temporarily house nonfarmworkers in vacant units in the event of a disaster or other critical occurrence. However, such emergency shelter shall only be permitted if there are no pending qualified farmworker household applications for residency.
</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_301168E4-D2FC-4D85-A10C-34CB1868CCA1">
<ns0:Num>SEC. 9.</ns0:Num>
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Section 50408 of the
<ns0:DocName>Health and Safety Code</ns0:DocName>
is amended to read:
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<ns0:Fragment>
<ns0:LawSection id="id_F8C54940-67E6-4370-92FD-3DA60721F7F2">
<ns0:Num>50408.</ns0:Num>
<ns0:LawSectionVersion id="id_60AB6E39-FACB-4861-A436-4768A312A468">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
On or before December 31 of each year, the department shall submit an annual report to the Governor and both houses of the Legislature on the operations and accomplishments during the previous fiscal year of the housing programs administered by the department, including, but not limited to, the Emergency Housing and Assistance Program and Community Development Block Grant activity.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
The report shall include all of the following information:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The number of units assisted by those programs.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The number of individuals and households served and their income levels.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The distribution of units among various areas of the state.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
The amount of other public and private funds leveraged by the assistance provided by those programs.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
Information detailing the assistance provided to various groups of persons by programs that are targeted to assist those groups.
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
The information required to be reported pursuant to Section 17031.8.
</html:p>
<html:p>
(7)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
An evaluation, in collaboration with the Department of Veterans Affairs, of any program established by the department pursuant to Article 3.2 (commencing with Section 987.001) of Chapter 6 of Division 4 of the Military and Veterans Code, including information relating to the effectiveness of assisted projects in helping veterans occupying any
supportive housing or transitional housing development that was issued funds pursuant to that article.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The evaluation shall include, but is not limited to, the following information:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Performance outcome data including, but not limited to, housing stability, housing exit information, and tenant satisfaction, which may be measured by a survey, and changes in income, benefits, and education.
</html:p>
<html:p>
(I)
<html:span class="EnSpace"/>
For purposes of this paragraph, the term “housing stability” includes, but is not limited to, how many tenants exit transitional housing to permanent housing or maintain permanent housing, and the length of time those tenants spent in assisted units.
</html:p>
<html:p>
(II)
<html:span class="EnSpace"/>
For purposes of this paragraph, the term “housing exit information” includes, but is not limited to,
the following:
</html:p>
<html:p>
(ia)
<html:span class="EnSpace"/>
How many tenants left assisted units.
</html:p>
<html:p>
(ib)
<html:span class="EnSpace"/>
The length of tenancy in assisted units.
</html:p>
<html:p>
(ic)
<html:span class="EnSpace"/>
The reason those tenants left assisted units, when that information is readily obtainable.
</html:p>
<html:p>
(id)
<html:span class="EnSpace"/>
The housing status of a tenant exiting an assisted unit upon exit when that information is readily available.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Client data, which may include, but is not limited to, demographic characteristics of the veteran and his or her family, educational and employment status of the veteran, and veteran-specific information including, but not limited to, disability ratings, type of discharge, branch, era of service, and veterans affairs health care eligibility.
</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_041FCD3E-C99C-4D3E-AE69-76A11DB26D46">
<ns0:Num>SEC. 10.</ns0:Num>
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Section 50676 of the
<ns0:DocName>Health and Safety Code</ns0:DocName>
is amended to read:
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<ns0:Fragment>
<ns0:LawSection id="id_98BBA99B-7FB6-4C7A-B2CF-92BE36A995AE">
<ns0:Num>50676.</ns0:Num>
<ns0:LawSectionVersion id="id_6AAAF42D-0669-41CD-952C-C19919CDBB5E">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
The department is hereby designated as the state agency responsible for administering funds received by the state from the federal Housing Trust Fund pursuant to the Housing and Economic Recovery Act of 2008 (Public Law 110-289), and implementing federal regulations. The department may use up to 10 percent of the federal Housing Trust Fund annual grant award for expenses of administering these funds.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
The department shall administer the funds through any existing or newly created programs that produce, preserve, rehabilitate, or support the operation of rental housing for extremely low income and very low income households, except that up to 10 percent of funding may be used
to support home ownership for extremely low income and very low income households. Any rental project funded from the federal Housing Trust Fund shall restrict affordability for 55 years through a recorded and enforceable affordability covenant. Any home ownership program funded from the federal Housing Trust Fund shall restrict affordability for 30 years through either a recorded and enforceable affordability covenant or a recorded and enforceable equity recapture agreement.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
The department shall collaborate with the California Housing Finance Agency to develop an allocation plan to demonstrate how the funds shall be distributed, based on the priority housing needs identified in the state’s consolidated plan prepared in accordance with Part 91 (commencing with Section 91.1) of Subtitle A of Title 24 of the Code of Federal Regulations. The
department shall submit the plan to the Assembly Committee on Housing and Community Development and the Senate Housing Committees 30 days after receipt of the federal funds.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
The allocation plan and guidelines shall give priority to projects based on:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
Geographic diversity.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The extent to which rents are affordable, especially to extremely low income households.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The merits of a project.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
Applicants readiness.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
The extent to which projects will use nonfederal funds.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
The department shall award funds to projects serving people experiencing homelessness, to the extent that a sufficient number of projects exist. The department may alter priority for funding to align eligibility for possible benefits, including Medi-Cal benefits intended to fund services for people experiencing homelessness.
</html:p>
</ns0:Content>
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</ns0:BillSection>
<ns0:BillSection id="id_84535248-2E0F-4F95-BE7E-45EBB8E37C00">
<ns0:Num>SEC. 11.</ns0:Num>
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Section 50827 of the
<ns0:DocName>Health and Safety Code</ns0:DocName>
is amended to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_BDDBF0D3-7F22-41B5-A0DE-8715E8F00476">
<ns0:Num>50827.</ns0:Num>
<ns0:LawSectionVersion id="id_289B8147-32DB-431B-84D3-932F63B42DE3">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
Thirty percent of the annual allocation of federal State Community Development Block Grant Program funds, less department administrative funds, shall be set aside for economic development projects and programs. All funds made available pursuant to the program shall, consistent with the requirements of subsection (c) of Section 5301 of Title 42 of the United States Code, be utilized to provide decent housing, a suitable living environment, and expanding economic opportunities, principally for persons and families of
low or moderate income. Following the adoption of guidelines pursuant to Section 50826.1, with approval by the Department of Finance and notification to the Joint Legislative Budget Committee, or June 30, 2018, whichever is sooner, if there are insufficient qualified applications for economic development project and program set aside provided by this section, as determined by the department’s review of all economic development applications received by the application deadline specified in the NOFA, these funds shall be available to make awards to other qualifying projects and programs submitted by the application deadline specified in the NOFA.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
On or before June 30, 2018, with the consultation of stakeholders, the department shall update Chapter 21 of its Grant Management Manual to facilitate the subscription of and reflect all federal requirements for economic development business assistance loans.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
It is the intent of the Legislature to remove impediments and streamline access for local agencies to the funds set aside by this section to assist with local economic development efforts. On or before January 1, 2018, the department shall do all of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
Provide electronic links on the department’s internet website to any applicable federal regulations or guidelines published by the United States Department of Housing and Urban Development applicable to eligible economic development activities.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Ensure that program staff are trained on the applicable federal law, regulations, or guidelines
published by the United States Department of Housing and Urban Development applicable to eligible economic development activities.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Prepare a schedule for the release of a NOFA to expedite the allocation of all unencumbered available funds, as of May 22, 2017, allocated pursuant to the requirements of this section.
</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_75FEAB99-A081-4203-AFF6-4476497C4175">
<ns0:Num>SEC. 12.</ns0:Num>
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Section 50828 of the
<ns0:DocName>Health and Safety Code</ns0:DocName>
is amended to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_44417C12-D6AB-45C9-B87C-91936116CAA8">
<ns0:Num>50828.</ns0:Num>
<ns0:LawSectionVersion id="id_319A78D9-A7B0-4660-9D85-1D845213219F">
<ns0:Content>
<html:p>Not less than 51 percent of the annual allocation of federal State Community Development Block Grant Program funds, less department administrative funds, shall be utilized by the department to make grants to eligible cities or counties for the purpose of providing or improving housing opportunities for persons and families of low or moderate income or for purposes directly related to the provision or improvement of housing opportunities for persons and families of low or moderate income, including, but not limited to, the construction of
infrastructure. Following the adoption of guidelines pursuant to Section 50826.1, with approval by the Department of Finance and notification to the Joint Legislative Budget Committee, or June 30, 2018, whichever is sooner, if there are insufficient qualified applications for providing or improving housing opportunities for the set aside provided by this section as determined by the department’s review of all applications for providing or improving housing opportunities received by the application deadline specified in the NOFA, these funds shall be available to make awards to other qualifying projects and programs submitted by the application deadline specified in the NOFA.</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_EA409DB8-488A-4B57-8BBD-305F8CFDECCC">
<ns0:Num>SEC. 13.</ns0:Num>
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Section 12206 of the
<ns0:DocName>Revenue and Taxation Code</ns0:DocName>
is amended to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_BCE1D53F-F732-4493-A74A-AB9E3476DD87">
<ns0:Num>12206.</ns0:Num>
<ns0:LawSectionVersion id="id_260E6C6B-E77B-431D-8BE7-17A40A905707">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
There shall be allowed as a credit against the “tax,” described by Section 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.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
“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.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
“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.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
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:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
It qualifies for a credit under Section 42(h)(4)(B) of the Internal Revenue Code, relating to special rule where 25 percent or more of building is financed with tax-exempt bonds subject to volume cap.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
(i)
<html:span class="EnSpace"/>
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, 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.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
(i)
<html:span class="EnSpace"/>
A taxpayer shall be eligible to claim the credit commencing in the taxable year the building is placed in service and the federal credit period commences,
notwithstanding that the certification pursuant to subparagraph (A) has not been issued by the California Tax Credit Allocation Committee, provided that the housing sponsor has filed a taxpayer certification with the California Tax Credit Allocation Committee and delivered a copy to the taxpayer. The amount of credit claimed by the taxpayer shall not exceed the pro rata share with respect to the amount of credit that the taxpayer purchased or is allocated per the partnership agreement, as applicable, of the lesser of either of the following:
</html:p>
<html:p>
(I)
<html:span class="EnSpace"/>
The applicable percentages for each of the four credit years, as specified in subdivision (c), multiplied by the qualified basis of the building set forth in the preliminary reservation.
</html:p>
<html:p>
(II)
<html:span class="EnSpace"/>
The amount of credit the project is eligible for as stated in the taxpayer certification.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
The California Tax Credit Allocation Committee may, but is not required to, review the taxpayer certification and other information provided by the housing sponsor to confirm both of the following:
</html:p>
<html:p>
(I)
<html:span class="EnSpace"/>
The calculations set forth in the taxpayer certification.
</html:p>
<html:p>
(II)
<html:span class="EnSpace"/>
The amount of credits allocated to the project is consistent with applicable California Tax Credit Allocation Committee rules and regulations for the purposes of making the certification required pursuant to subparagraph (A).
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
If the California Tax Credit Allocation Committee issues a certification pursuant to subparagraph (A) that is inconsistent with the taxpayer certification upon which a credit has been claimed, the taxpayer shall amend any previously filed tax returns to reflect the credit amount certified by the California Tax
Credit Allocation Committee pursuant to subparagraph (A).
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
For purposes of this subparagraph, “taxpayer certification” means a certified statement from the certified public accountant of the housing sponsor. The taxpayer certification shall contain the amount of the credit the project is eligible for, the taxable year the building is placed in service, and the taxable year in which the federal credit period for the building has commenced.
</html:p>
<html:p>
(v)
<html:span class="EnSpace"/>
The taxpayer shall, upon request, provide a copy of the taxpayer certification pursuant to clause (iv) or the California Tax Credit Allocation Committee’s certification pursuant to subparagraph (A), as applicable, to the Department of Insurance.
</html:p>
<html:p>
(vi)
<html:span class="EnSpace"/>
In the case of a failure to provide a copy of the taxpayer certification pursuant to clause (iv) or the California Tax Credit
Allocation Committee’s certification pursuant to subparagraph (A), if the Department of Insurance so requires, no credit under this section shall be allowed for that taxable year until a copy of that certification is provided.
</html:p>
<html:p>
(vii)
<html:span class="EnSpace"/>
The changes made to this subparagraph by the act adding this clause shall apply for taxable years beginning on or after January 1, 2023.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(E)
<html:span class="EnSpace"/>
(i)
<html:span class="EnSpace"/>
Except as described in clause (ii) or (iii), 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.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Notwithstanding clause (i), the California Tax Credit Allocation Committee may allocate the credit for buildings designated under Section 42(d)(5)(B)(v) of the Internal Revenue Code that are restricted to having 50 percent of the building’s occupants be special needs households, as defined in the California Code of Regulations by the California Tax Credit Allocation Committee,
provided that the credit allowed under this section shall not exceed 30 percent of the eligible basis of the building.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
On and after January 1, 2018, notwithstanding clause (i), the California Tax Credit Allocation Committee may allocate the credit pursuant to paragraph (6) of subdivision (c) or subparagraph (B) of paragraph (1) of subdivision (g), 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.
</html:p>
<html:p>
(F)
<html:span class="EnSpace"/>
(i)
<html:span class="EnSpace"/>
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 housing credit, are reduced by an equivalent amount.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
Section 42(b) of the Internal Revenue Code, relating to applicable percentage: 70 percent present value credit for certain new buildings; 30 percent present value credit for certain other buildings, shall be modified as follows:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
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”
</html:p>
<html:p> means for each of the first three</html:p>
<html:p> years, 9 percent of the qualified basis of the building, and for the fourth year,
3 percent of the qualified basis of the building.</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
In the case of any qualified low-income building that is a new building and is federally subsidized and receiving an allocation pursuant to subparagraph (B) of paragraph (1) of subdivision (g), the term “applicable percentage” means for each of the first three years, 9 percent of the qualified basis of the building, and for the fourth year, 3 percent of the qualified basis of the building.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
In the case of any qualified low-income building that receives an allocation after 1989 pursuant to subparagraph (A) of paragraph (1) of subdivision (g) 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”
</html:p>
<html:p> means for each of the first three</html:p>
<html:p>
years, 4 percent of the qualified basis of the building, and for the fourth year, 1 percent of the qualified basis of the building.</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
In the case of any qualified low-income building that meets all of the requirements of subparagraphs (A) through (D), inclusive, the term “applicable percentage” means 30 percent for each of the first three years and 5 percent for the fourth year. A qualified low-income building receiving an allocation under this paragraph is ineligible to also receive an allocation under paragraph
(3).
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
The qualified low-income building is at least 15 years old.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The qualified low-income building is either:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Serving households of very low income or extremely low income such that the average maximum household income as restricted, pursuant to an existing regulatory agreement with a federal, state, county, local, or other governmental agency, is not more than 45 percent of the area median gross income, as determined under Section 42 of the Internal Revenue Code, relating to low-income housing credit, adjusted by household size, and a tax credit regulatory agreement is entered into for a period of not less than 55 years restricting the average targeted household income to no more than 45 percent of the area median income.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Financed under Section 514 or 521 of the National Housing Act of 1949 (42 U.S.C. Sec. 1485).
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
The qualified low-income building would have insufficient credits under paragraphs (2) and (3) to complete substantial rehabilitation due to a low appraised value.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
The qualified low-income building will complete the substantial rehabilitation in connection with the credit allocation herein.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
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:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
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:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
The Below-Market-Interest-Rate Program pursuant to Section 221(d)(3) of the National Housing Act, Sections 1715
<html:i>l</html:i>
(d)(3) and (5) of Title 12 of the United States Code.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
Section 236 of the National Housing Act, Section 1715z-1 of Title 12 of the United States Code.
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(v)
<html:span class="EnSpace"/>
Programs under Sections 514, 515, 516, 533, and 538 of the Housing Act of 1949 (Public Law 81-171), as amended.
</html:p>
<html:p>
(vi)
<html:span class="EnSpace"/>
The low-income housing credit program set forth in Section 42 of the Internal Revenue Code, relating to low-income housing credit, this section, and Sections 17058 and 23610.5.
</html:p>
<html:p>
(vii)
<html:span class="EnSpace"/>
Programs for loans or grants administered by the Department of Housing and Community Development.
</html:p>
<html:p>
(viii)
<html:span class="EnSpace"/>
Section 202 of the Housing Act of 1959 (12 U.S.C. Sec. 1701q), as amended.
</html:p>
<html:p>
(ix)
<html:span class="EnSpace"/>
Section 142(d) of the Internal Revenue Code or its predecessors.
</html:p>
<html:p>
(x)
<html:span class="EnSpace"/>
Section 147 of the
Internal Revenue Code, as enacted by the Tax Reform Act of 1986 (Public Law 99-514), or as subsequently amended, including as amended by the Tax Cuts and Jobs Act of 2017 (Public Law 115-97) and all amendments enacted prior to the Tax Cuts and Jobs Act of 2017 (Public Law 115-97).
</html:p>
<html:p>
(xi)
<html:span class="EnSpace"/>
Title I of the Housing and Community Development Act of 1974, as amended.
</html:p>
<html:p>
(xii)
<html:span class="EnSpace"/>
Title II of the Cranston-Gonzalez National Affordable Housing Act of 1990, as amended.
</html:p>
<html:p>
(xiii)
<html:span class="EnSpace"/>
Titles IV and V of the McKinney-Vento Homeless Assistance Act of 1987, as amended, including the Department of Housing and Urban Development’s Supportive Housing Program, Shelter Plus Care Program, and surplus federal property disposition program.
</html:p>
<html:p>
(xiv)
<html:span class="EnSpace"/>
The following assistance provided by counties
and cities in exchange for restrictions on the maximum rents that may be charged for units within a multifamily rental housing development and on the maximum tenant income as a condition of eligibility for occupancy of the unit subject to the rent restriction, as reflected by a recorded agreement with a county or city:
</html:p>
<html:p>
(I)
<html:span class="EnSpace"/>
Loans or grants provided using tax increment financing pursuant to the Community Redevelopment Law (Part 1 (commencing with Section 33000) of Division 24 of the Health and Safety Code).
</html:p>
<html:p>
(II)
<html:span class="EnSpace"/>
Local housing trust funds, as referred to in paragraph (3) of subdivision (a) of Section 50843 of the Health and Safety Code.
</html:p>
<html:p>
(III)
<html:span class="EnSpace"/>
The sale or lease of public property at or below market rates.
</html:p>
<html:p>
(IV)
<html:span class="EnSpace"/>
The granting of density bonuses, or concessions
or incentives, including fee waivers, parking variances, or amendments to general plans, zoning, or redevelopment project area plans, pursuant to Chapter 4.3 (commencing with Section 65915) of Division 1 of Title 7 of the Government Code.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
As used in subparagraph (A), “government assistance” shall not include the use of tenant-based housing choice vouchers under subsection (o) of Section 1437f of Title 42 of the United States Code, excluding paragraph (13), relating to project-based assistance. Restrictions shall not include any rent control or rent stabilization ordinance imposed by a county or city.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
If the development is subject to restrictions on rent and income levels, 50 percent of the units are also restricted to initial occupancy by lower income households, as defined in Section 50079.5 of the Health and Safety Code.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
The restrictions on rent and income levels, excluding any restrictions recorded pursuant to paragraph (2) of subdivision (e) of Section 65863.11 or Section 65863.13 of the Government Code or in connection with interim or acquisition financing, will terminate or the federally insured mortgage or rent subsidy contract on the property is eligible for prepayment or termination any time within five years before or after the date of application to the California Tax Credit Allocation Committee.
</html:p>
<html:p>
(E)
<html:span class="EnSpace"/>
The entity acquiring the property enters into a regulatory agreement that requires the property to be operated in accordance with the requirements of Section 42 of the Internal Revenue Code and any further requirements added by the California Tax Credit Allocation Committee to implement the low-income housing tax credit established by Section 42 of the Internal Revenue Code (26 U.S.C. Sec. 42),
this section, and Sections 17058 and 23610.5 pursuant to Chapter 3.6 (commencing with Section 50199.4) of Part 1 of Division 31 of the Health and Safety Code.
</html:p>
<html:p>
(F)
<html:span class="EnSpace"/>
The property satisfies the requirements of Section 42(e) of the Internal Revenue Code, relating to rehabilitation expenditures treated as separate new building, except that the provisions of Section 42(e)(3)(A)(ii)(I) shall not apply.
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
On and after January 1, 2018, in the case of any qualified low-income building that is (A) farmworker housing, as defined by paragraph (2) of subdivision (h) of Section 50199.7 of the Health and Safety Code, and (B) is federally subsidized, the term “applicable percentage” means for each of the first three years, 20 percent of the qualified basis of the building, and for the fourth year, 15 percent of the qualified basis of the building.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
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:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
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:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
An amount not to exceed 8 percent of the lesser of:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Twenty percent of the adjusted basis of the building as of
the close of the first taxable year of the credit period.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
Any amount allowed to be distributed under subparagraph (A) that is not available for distribution during the first 5 years of the compliance period may be accumulated and distributed any time during the first 15 years of the compliance period but not thereafter.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
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:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
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.”
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
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 1st year of credit period, shall not apply to the tax credit under this section.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Section 42(f)(3) of the Internal Revenue Code, relating to determination of applicable percentage with respect to increases in qualified basis after 1st year of credit period, is modified to read:
</html:p>
<html:p>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.</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
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:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
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, does not apply and instead the following provisions apply:
</html:p>
<html:p>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.</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
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, do not apply to this section.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
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:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
Seventy million dollars ($70,000,000) for the 2001 calendar year, and, for the 2002 calendar year and each calendar year thereafter, 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.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Five hundred million dollars ($500,000,000) for the 2020 calendar year, and up to five hundred million dollars ($500,000,000) for the 2021 calendar year and every year thereafter. Allocations shall only be available pursuant to this subparagraph in the 2021 calendar year and thereafter if the annual Budget Act, or if any bill providing for appropriations related to the Budget Act, specifies an amount to be available for allocation in that calendar year by the California Tax Credit Allocation Committee, after the California Tax Credit Allocation Committee and the California Debt Limit Allocation Committee have adopted regulations, rules, or guidelines to align the programs of both committees with the objective of increasing production and containing costs as described in clause (iii). The California Tax Credit
Allocation Committee shall accept applications for the 2021 calendar year not sooner than 30 days after these regulations, rules, or guidelines have been adopted. The California Debt Limit Allocation Committee shall not accept applications for the 2021 calendar year for bond allocations for an eligible project under this section prior to issuing, reviewing, and publishing a new tax-exempt private activity bond demand survey. A housing sponsor receiving a nonfederally subsidized allocation under subdivision (c) shall not be eligible for receipt of the housing credit allocated from the increased amount under this subparagraph. Except as provided in clause (vi), a housing sponsor receiving a nonfederally subsidized allocation under subdivision (c) shall remain eligible for receipt of the housing credit allocated from the credit ceiling amount under subparagraph (A).
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Eligible projects for allocations under this subparagraph include any new
building, as defined in Section 42(i)(4) of the Internal Revenue Code, relating to newly constructed buildings, and the regulations promulgated thereunder, excluding rehabilitation expenditures under Section 42(e) of the Internal Revenue Code, relating to rehabilitation expenditures treated as separate new building, and is federally subsidized. Eligible projects for allocations under this subparagraph also include any retrofitting and repurposing of existing nonresidential structures, including, but not limited to, hotels and motels, that were converted to residential use within the previous five years from the date of the application.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Notwithstanding any other provision of this section, for allocations pursuant to this subparagraph for the 2020 calendar year, the California Tax Credit Allocation Committee shall consider projects located throughout the state and shall allocate housing credits, subject to the minimum federal requirements as
set forth in Sections 42 and 142 of the Internal Revenue Code, the minimum requirements set forth in Sections 5033 and 5190 of the California Debt Limit Allocation Committee regulations, and the minimum set forth in Section 10326 of the Tax Credit Allocation Committee regulations, for projects that can begin construction within 180 days from award, subject to availability of funds.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
(I)
<html:span class="EnSpace"/>
Notwithstanding any other provision of this section, for allocations pursuant to this subparagraph for the 2021 calendar year and thereafter, the California Tax Credit Allocation Committee and the California Debt Limit Allocation Committee shall develop and prescribe regulations, rules, or guidelines necessary to implement a new allocation methodology that is aimed at increasing production and containing costs, which would include a scoring system that maximizes the efficient use of public subsidy and benefit created through the
private activity bond and low-income housing tax credit programs. The factors for determining the efficient use of public subsidy and benefit shall include, but not be limited to, all of the following:
</html:p>
<html:p>
(ia)
<html:span class="EnSpace"/>
The number and size of units developed including local incentives provided to increase density.
</html:p>
<html:p>
(ib)
<html:span class="EnSpace"/>
The proximity to amenities, jobs, and public transportation.
</html:p>
<html:p>
(ic)
<html:span class="EnSpace"/>
The location of the development.
</html:p>
<html:p>
(id)
<html:span class="EnSpace"/>
The delivery of housing affordable to very low and extremely low income households by the development.
</html:p>
<html:p>
(II)
<html:span class="EnSpace"/>
The efficient use of public subsidy and benefit criteria specified in this clause shall take into account the total state subsidy provided and prioritize cost containment and
increased unit production. These regulations, rules, or guidelines developed pursuant to this subparagraph shall also consider updated definitions for at-risk preservation and new construction.
</html:p>
<html:p>
(III)
<html:span class="EnSpace"/>
For bond allocations for the 2021 calendar year to projects eligible for an allocation under this subparagraph, the California Debt Limit Allocation Committee may adopt emergency regulations.
</html:p>
<html:p>
(IV)
<html:span class="EnSpace"/>
The California Tax Credit Allocation Committee shall consider amending the regulations establishing a scoring system, as required by this clause, to also grant, for farmworker housing as defined in subdivision (h) of Section 50199.7 of the Health and Safety Code, maximum points to farmworker housing projects under the housing needs category, and an initial five points in the category for site amenities beyond those required as additional thresholds.
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
Of the amount available pursuant to this subparagraph, and notwithstanding any other requirement of this section, the California Tax Credit Allocation Committee may allocate up to two hundred million dollars ($200,000,000) for housing financed by the California Housing Finance Agency under its Mixed-Income Program.
</html:p>
<html:p>
(v)
<html:span class="EnSpace"/>
(I)
<html:span class="EnSpace"/>
For the calendar years of 2024 to 2034, inclusive, of the amount available pursuant to this subparagraph, the lesser of 5 percent of that amount or twenty-five million dollars ($25,000,000) per calendar year shall be set aside for projects to provide farmworker housing, as defined in subdivision (h) of Section 50199.7 of the Health and Safety Code, and administered consistent with the credits available pursuant to paragraph (4).
</html:p>
<html:p>
(II)
<html:span class="EnSpace"/>
Any credits pursuant to this clause that
remain unallocated following the conclusion of a funding round shall roll over to consecutive subsequent funding rounds in that calendar year with the exception that any credits that remain unallocated after the final funding round in that calendar year shall be added back to the aggregate amount of credits that may be allocated pursuant to this subparagraph.
</html:p>
<html:p>
(III)
<html:span class="EnSpace"/>
For the 2035 calendar year, and every year thereafter, of the amount available pursuant to this subparagraph, a portion of the amount allocated shall be set aside for projects to provide farmworker housing, as defined in subdivision (h) of Section 50199.7 of the Health and Safety Code. The amount set aside shall be determined by the Legislature upon consideration of the comprehensive strategy, or most recent update thereof, provided by the Department of Housing and Community Development pursuant to subdivision (c) of Section 50408.5 of the Health and Safety Code.
</html:p>
<html:p>
(vi)
<html:span class="EnSpace"/>
(I)
<html:span class="EnSpace"/>
For any calendar year in which the California Debt Limit Allocation Committee has declared a competition for the award of tax-exempt bond authority for qualified residential rental projects, the California Tax Credit Allocation Committee may allocate some or all of the credits allocated under this subparagraph, except for any credits allocated for housing financed by the California Housing Finance Agency under its Mixed-Income Program, for nonfederally subsidized buildings eligible for credits under Section 42 of the Internal Revenue Code, relating to low-income housing credit, and shall allocate the remainder of these credits for new buildings, as defined in Section 42(i)(4) of the Internal Revenue Code, relating to new buildings, that are federally subsidized and that can begin construction within a reasonable time, as determined by the California Tax Credit Allocation Committee.
</html:p>
<html:p>
(II)
<html:span class="EnSpace"/>
For any calendar year in which the California Debt Limit Allocation Committee has not declared a competition for the award of tax-exempt bond authority for qualified residential rental projects, projects receiving an award of credits pursuant to this subparagraph shall begin construction within a reasonable time, as determined by the California Tax Credit Allocation Committee.
</html:p>
<html:p>
(III)
<html:span class="EnSpace"/>
Notwithstanding subclauses (I) and (II), if credits available under this subparagraph remain unallocated after the final California Debt Limit Allocation Committee round for qualified residential rental projects in a given calendar year, the California Tax Credit Allocation Committee may allocate some or all of the remaining credits for nonfederally subsidized buildings eligible for credits under Section 42 of the Internal Revenue Code, relating to low-income housing credit.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The unused housing credit ceiling, if any, for the preceding calendar years.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
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 the regulatory 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:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
A term not less than the compliance period.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
A requirement that the agreement be recorded in the official records of the county in which the qualified low-income housing project is located.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(E)
<html:span class="EnSpace"/>
A provision incorporating the requirements of Section 42 of the Internal Revenue Code, relating to low-income housing credit, as modified by this section.
</html:p>
<html:p>
(F)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(G)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(H)
<html:span class="EnSpace"/>
A provision that 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.
</html:p>
<html:p>
(j)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
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:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
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:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
The housing sponsor shall have and maintain control of the site for the project.
</html:p>
<html:p>
(v)
<html:span class="EnSpace"/>
The housing sponsor shall demonstrate that the project complies with all applicable local land use and zoning ordinances.
</html:p>
<html:p>
(vi)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(vii)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The committee shall give a preference to those projects satisfying all of the threshold requirements of subparagraph (A) if both of the following apply:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
The project serves the lowest income tenants at rents affordable to those tenants.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
The project is obligated to serve qualified tenants for the longest period.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
In addition to the provisions of subparagraphs (A) and (B), the committee shall use the following criteria in allocating housing credits:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Projects serving large families in which a substantial number, as defined by the committee, of all residential units are low-income units with three or more bedrooms.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Projects providing single-room occupancy units serving very low income tenants.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
Existing projects that are “at risk of conversion,” as defined by paragraph (5) of subdivision (c).
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(v)
<html:span class="EnSpace"/>
Projects that provide tenant amenities not generally available to residents of low-income housing projects.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
Subparagraphs (B) and (C) shall not apply to projects receiving an allocation pursuant to subparagraph (B) of paragraph (1) of subdivision (g).
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(k)
<html:span class="EnSpace"/>
Section 42(l) of the Internal Revenue Code, relating to certifications and other reports to secretary, shall be modified as follows:
</html:p>
<html:p>The term “secretary” shall be replaced by the term “Franchise Tax Board.”</html:p>
<html:p>
(
<html:i>l</html:i>
)
<html:span class="EnSpace"/>
In the case in which 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 years if necessary, until the credit has been exhausted.
</html:p>
<html:p>
(m)
<html:span class="EnSpace"/>
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, apply to calendar years after 1993.
</html:p>
<html:p>
(n)
<html:span class="EnSpace"/>
The provisions of Section 11407(c) of Public Law 101-508, relating to election to accelerate credit, shall not apply.
</html:p>
<html:p>
(o)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
For a project that receives a preliminary reservation under this section beginning on or after January 1, 2016, a taxpayer may elect, in the manner prescribed by the California Tax Credit Allocation Committee, to sell all or any portion of any credit allowed under this section to one or more unrelated parties for each taxable year in which
the credit is allowed, subject to subparagraph (B). The taxpayer may make the election to sell pursuant to this subdivision at any time before the California Tax Credit Allocation Committee allocates a final credit amount for the project pursuant to this section, at which point the election shall become irrevocable.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
A credit that a taxpayer elects to sell all or a portion of pursuant to this subdivision shall be sold for consideration that is not less than 80 percent of the amount of the credit.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
The taxpayer that originally received the credit shall report to the California Tax Credit Allocation Committee within 10 days of the sale of the credit, in the form and manner specified by the California Tax Credit Allocation Committee, all required information regarding the purchase and sale of the credit, including the social security or other taxpayer
identification number of the unrelated party or parties to whom the credit has been sold, the face amount of the credit sold, and the amount of consideration received by the taxpayer for the sale of the credit.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The California Tax Credit Allocation Committee shall provide an annual listing to the Franchise Tax Board, in a form and manner agreed upon by the California Tax Credit Allocation Committee and the Franchise Tax Board, of the taxpayers that have sold or purchased a credit pursuant to this subdivision.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
A credit may be sold pursuant to this subdivision to more than one unrelated party.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
Notwithstanding any other law, the taxpayer that originally received the credit that is sold pursuant to paragraph (1) shall remain solely liable for all obligations and liabilities imposed on the taxpayer by this
section with respect to the credit, none of which shall apply to a party to whom the credit has been sold or subsequently transferred. Parties that purchase credits pursuant to paragraph (1) shall be entitled to utilize the purchased credits in the same manner in which the taxpayer that originally received the credit could utilize them.
</html:p>
<html:p>
(p)
<html:span class="EnSpace"/>
The California Tax Credit Allocation Committee may prescribe rules, guidelines, or procedures necessary or appropriate to carry out the purposes of this section, including any guidelines regarding the allocation of the credit allowed under this section. Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code shall not apply to any rule, guideline, or procedure prescribed by the California Tax Credit Allocation Committee pursuant to this section.
</html:p>
<html:p>
(q)
<html:span class="EnSpace"/>
This section shall remain in effect for as long as
Section 42 of the Internal Revenue Code, relating to low-income housing credit, remains in effect.
</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_747A3818-B70B-4384-BEDA-DFD029EB4D66">
<ns0:Num>SEC. 14.</ns0:Num>
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Section 17058 of the
<ns0:DocName>Revenue and Taxation Code</ns0:DocName>
is amended to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_D5B99D7F-543F-4A89-BBE4-0164BE6C874E">
<ns0:Num>17058.</ns0:Num>
<ns0:LawSectionVersion id="id_6BAE2794-8408-46A0-885D-189DB2EDB7FF">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
There shall be allowed as a credit against the “net tax,” defined in Section 17039, 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.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
“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.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
“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.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
The low-income housing project shall be located in California and shall meet either of the following requirements:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
It qualifies for a credit under Section 42(h)(4)(B) of the Internal Revenue Code, relating to special rule where 25 percent or more of building is financed with tax-exempt bonds subject to volume cap.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
(i)
<html:span class="EnSpace"/>
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, 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.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
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).
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
(i)
<html:span class="EnSpace"/>
A taxpayer shall be eligible to claim the credit commencing in the taxable year the building is placed in service and the federal credit period commences, notwithstanding that the certification pursuant to subparagraph (A) has not been issued by the California Tax Credit Allocation Committee, provided that the housing sponsor has filed a taxpayer certification with the California Tax Credit Allocation Committee and delivered a copy to the taxpayer. The amount of credit claimed
by the taxpayer shall not exceed the pro rata share with respect to the amount of credit that the taxpayer purchased or is allocated per the partnership agreement, as applicable, of the lesser of either of the following:
</html:p>
<html:p>
(I)
<html:span class="EnSpace"/>
The applicable percentages for each of the four credit years, as specified in subdivision (c), multiplied by the qualified basis of the building set forth in the preliminary reservation.
</html:p>
<html:p>
(II)
<html:span class="EnSpace"/>
The amount of credit the project is eligible for as stated in the taxpayer certification.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
The California Tax Credit Allocation Committee may, but is not required to, review the taxpayer certification and other information provided by the housing sponsor to confirm both of the following:
</html:p>
<html:p>
(I)
<html:span class="EnSpace"/>
The calculations set forth in the taxpayer
certification.
</html:p>
<html:p>
(II)
<html:span class="EnSpace"/>
The amount of credits allocated to the project is consistent with applicable California Tax Credit Allocation Committee rules and regulations for the purposes of making the certification required pursuant to subparagraph (A).
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
If the California Tax Credit Allocation Committee issues a certification pursuant to subparagraph (A) that is inconsistent with the taxpayer certification upon which a credit has been claimed, the taxpayer shall amend any previously filed tax returns to reflect the credit amount certified by the California Tax Credit Allocation Committee pursuant to subparagraph (A).
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
For purposes of this subparagraph, “taxpayer certification” means a certified statement from the certified public accountant of the housing sponsor. The taxpayer certification shall contain the amount
of the credit the project is eligible for, the taxable year the building is placed in service, and the taxable year in which the federal credit period for the building has commenced.
</html:p>
<html:p>
(v)
<html:span class="EnSpace"/>
The taxpayer shall, upon request, provide a copy of the taxpayer certification pursuant to clause (iv) or the California Tax Credit Allocation Committee’s certification pursuant to subparagraph (A), as applicable, to the Franchise Tax Board.
</html:p>
<html:p>
(vi)
<html:span class="EnSpace"/>
In the case of a failure to provide a copy of the taxpayer certification pursuant to clause (iv) or the California Tax Credit Allocation Committee’s certification pursuant to subparagraph (A), if the Franchise Tax Board so requires, no credit under this section shall be allowed for that taxable year until a copy of that certification is provided.
</html:p>
<html:p>
(vii)
<html:span class="EnSpace"/>
The changes made to this subparagraph
by the act adding this clause shall apply for taxable years beginning on or after January 1, 2023.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
All elections made by the taxpayer pursuant to Section 42 of the Internal Revenue Code, relating to low-income housing credit, apply to this section.
</html:p>
<html:p>
(E)
<html:span class="EnSpace"/>
(i)
<html:span class="EnSpace"/>
Except as described in clause (ii) or (iii), 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.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Notwithstanding clause (i), the California Tax Credit Allocation Committee may allocate the credit for buildings designated under Section 42(d)(5)(B)(v) of the Internal Revenue Code that are restricted to having 50 percent of the building’s occupants be special needs households, as defined in the California Code of Regulations by the California Tax Credit Allocation Committee, provided that
the credit allowed under this section shall not exceed 30 percent of the eligible basis of the building.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
On and after January 1, 2018, notwithstanding clause (i), the California Tax Credit Allocation Committee may allocate the credit pursuant to paragraph (7) of subdivision (c) or subparagraph (B) of paragraph (1) of subdivision (g), 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.
</html:p>
<html:p>
(F)
<html:span class="EnSpace"/>
(i)
<html:span class="EnSpace"/>
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 housing credit, are reduced by an equivalent amount.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
Section 42(b) of the Internal Revenue Code, relating to applicable percentage: 70 percent present value credit for certain new buildings; 30 percent present value credit for certain other buildings, shall be modified as follows:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
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”
</html:p>
<html:p> means for each of the first three</html:p>
<html:p> years, 9 percent of the qualified basis of the building, and for the fourth year, 3 percent of the qualified basis of the building.</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
In the case of any qualified low-income building that is a new building that is federally subsidized and receiving an allocation pursuant to subparagraph (B) of paragraph (1) of subdivision (g), the term “applicable percentage” means for each of the first three years, 9 percent of the qualified basis of the building, and for the fourth year, 3 percent of the qualified basis of the building.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
In the case of any qualified low-income building that receives an allocation after 1989 pursuant to subparagraph (A) of paragraph (1) of
subdivision (g) 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”
</html:p>
<html:p> means for each of the first three</html:p>
<html:p> years, 4 percent of the qualified basis of the building, and for the fourth year, 1 percent of the qualified basis of the building.</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
In the case of any qualified low-income building that meets all of
the requirements of subparagraphs (A) through (D), inclusive, the term “applicable percentage” means 30 percent for each of the first three years and 5 percent for the fourth year. A qualified low-income building receiving an allocation under this paragraph is ineligible to also receive an allocation under paragraph (3).
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
The qualified low-income building is at least 15 years old.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The qualified low-income building is either:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Serving households of very low income or extremely low income such that the average maximum household income as restricted, pursuant to an existing regulatory agreement with a federal, state, county, local, or other governmental agency, is not more than 45 percent of the area median gross income, as determined under Section 42 of the Internal Revenue Code, relating to low-income
housing credit, adjusted by household size, and a tax credit regulatory agreement is entered into for a period of not less than 55 years restricting the average targeted household income to no more than 45 percent of the area median income.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Financed under Section 514 or 521 of the National Housing Act of 1949 (42 U.S.C. Sec. 1485).
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
The qualified low-income building would have insufficient credits under paragraphs (2) and (3) to complete substantial rehabilitation due to a low appraised value.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
The qualified low-income building will complete the substantial rehabilitation in connection with the credit allocation herein.
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
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:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
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:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
The Below-Market-Interest-Rate Program pursuant to Section 221(d)(3) of the National Housing Act, Sections 1715
<html:i>l</html:i>
(d)(3) and (5) of Title 12 of the United States Code.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
Section 236 of the National Housing Act,
Section 1715z-1 of Title 12 of the United States Code.
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(v)
<html:span class="EnSpace"/>
Programs under Sections 514, 515, 516, 533, and 538 of the Housing Act of 1949 (Public Law 81-171), as amended.
</html:p>
<html:p>
(vi)
<html:span class="EnSpace"/>
The low-income housing credit program set forth in Section 42 of the Internal Revenue Code, relating to low-income housing credit, this section, and Sections 12206 and 23610.5.
</html:p>
<html:p>
(vii)
<html:span class="EnSpace"/>
Programs for loans or grants administered by the Department of Housing and Community Development.
</html:p>
<html:p>
(viii)
<html:span class="EnSpace"/>
Section 202 of the Housing Act of 1959 (12 U.S.C.
Sec. 1701q), as amended.
</html:p>
<html:p>
(ix)
<html:span class="EnSpace"/>
Section 142(d) of the Internal Revenue Code or its predecessors.
</html:p>
<html:p>
(x)
<html:span class="EnSpace"/>
Section 147 of the Internal Revenue Code, as enacted by the Tax Reform Act of 1986 (Public Law 99-514), or as subsequently amended, including as amended by the Tax Cuts and Jobs Act of 2017 (Public Law 115-97) and all amendments enacted prior to the Tax Cuts and Jobs Act of 2017 (Public Law 115-97).
</html:p>
<html:p>
(xi)
<html:span class="EnSpace"/>
Title I of the Housing and Community Development Act of 1974, as amended.
</html:p>
<html:p>
(xii)
<html:span class="EnSpace"/>
Title II of the Cranston-Gonzalez National Affordable Housing Act of 1990, as amended.
</html:p>
<html:p>
(xiii)
<html:span class="EnSpace"/>
Titles IV and V of the McKinney-Vento Homeless Assistance Act of 1987, as amended, including the Department of Housing
and Urban Development’s Supportive Housing Program, Shelter Plus Care Program, and surplus federal property disposition program.
</html:p>
<html:p>
(xiv)
<html:span class="EnSpace"/>
The following assistance provided by counties and cities in exchange for restrictions on the maximum rents that may be charged for units within a multifamily rental housing development and on the maximum tenant income as a condition of eligibility for occupancy of the unit subject to the rent restriction, as reflected by a recorded agreement with a county or city:
</html:p>
<html:p>
(I)
<html:span class="EnSpace"/>
Loans or grants provided using tax increment financing pursuant to the Community Redevelopment Law (Part 1 (commencing with Section 33000) of Division 24 of the Health and Safety Code).
</html:p>
<html:p>
(II)
<html:span class="EnSpace"/>
Local housing trust funds, as referred to in Section 50843 of the Health and Safety Code.
</html:p>
<html:p>
(III)
<html:span class="EnSpace"/>
The sale or lease of public property at or below market rates.
</html:p>
<html:p>
(IV)
<html:span class="EnSpace"/>
The granting of density bonuses, or concessions or incentives, including fee waivers, parking variances, or amendments to general plans, zoning, or redevelopment project area plans, pursuant to Chapter 4.3 (commencing with Section 65915) of Division 1 of Title 7 of the Government Code.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
As used in subparagraph (A), “government assistance” shall not include the use of tenant-based housing choice vouchers under subsection (o) of Section 1437f of Title 42 of the United States Code, excluding paragraph (13) relating to project-based assistance. Restrictions shall not include any rent control or rent stabilization ordinance imposed by a county or city.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
If the development is subject
to restrictions on rent and income levels, 50 percent of the units are also restricted to initial occupancy by lower income households, as defined in Section 50079.5 of the Health and Safety Code.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
The restrictions on rent and income levels, excluding any restrictions recorded pursuant to paragraph (2) of subdivision (e) of Section 65863.11 or Section 65863.13 of the Government Code or in connection with interim or acquisition financing, will terminate or the federally insured mortgage or rent subsidy contract on the property is eligible for prepayment or termination any time within five years before or after the date of application to the California Tax Credit Allocation Committee.
</html:p>
<html:p>
(E)
<html:span class="EnSpace"/>
The entity acquiring the property enters into a regulatory agreement that requires the property to be operated in accordance with the requirements of Section 42 of the Internal Revenue Code and
any further requirements added by the California Tax Credit Allocation Committee to implement the low-income housing tax credit established by Section 42 of the Internal Revenue Code (26 U.S.C. Sec. 42), this section, and Sections 12206 and 23610.5 pursuant to Chapter 3.6 (commencing with Section 50199.4) of Part 1 of Division 31 of the Health and Safety Code.
</html:p>
<html:p>
(F)
<html:span class="EnSpace"/>
The property satisfies the requirements of Section 42(e) of the Internal Revenue Code, relating to rehabilitation expenditures treated as separate new building, except that the provisions of Section 42(e)(3)(A)(ii)(I) shall not apply.
</html:p>
<html:p>
(7)
<html:span class="EnSpace"/>
On and after January 1, 2018, in the case of any qualified low-income building that is (A) farmworker housing, as defined by paragraph (2) of subdivision (h) of Section 50199.7 of the Health and Safety Code, and (B) is federally subsidized, the term “applicable percentage” means for
each of the first three years, 20 percent of the qualified basis of the building, and for the fourth year, 15 percent of the qualified basis of the building.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
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:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
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:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
An amount not to exceed 8 percent of the lesser of:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
The owner equity, which 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.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Twenty percent of the adjusted basis of the building as of the close of the first taxable year of the credit period.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
Any amount allowed to be distributed under subparagraph (A) that is not available for distribution during the first 5 years of the compliance period may be accumulated and distributed any time during the first 15 years of the compliance period but not thereafter.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
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:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
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.”
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
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 rules for 1st year of credit period, shall not apply to the tax credit under this section.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Section 42(f)(3) of the Internal Revenue Code, relating to determination of applicable percentage with respect to increases in qualified basis after 1st year of credit period, is modified to read:
</html:p>
<html:p>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.</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
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:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
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, does not apply and instead the following provisions apply:
</html:p>
<html:p>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.</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
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, do not apply to this section.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
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:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
Seventy million dollars ($70,000,000) for the 2001 calendar year, and, for the 2002 calendar year and each calendar year thereafter, 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.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Five hundred million dollars ($500,000,000) for the 2020 calendar year, and up to five hundred million dollars ($500,000,000) for the 2021 calendar year and every year thereafter. Allocations shall only be available pursuant to this subparagraph in the 2021 calendar year and thereafter if the annual Budget Act, or if any bill providing for appropriations related to the Budget Act, specifies an amount to be available for allocation in that calendar year by the California Tax Credit Allocation Committee, and after the California Tax Credit Allocation Committee and the California Debt Limit Allocation Committee have adopted regulations, rules, or guidelines to align the
programs of both committees with the objective of increasing production and containing costs as described in clause (iii). The California Tax Credit Allocation Committee shall accept applications for the 2021 calendar year not sooner than 30 days after these regulations, rules, or guidelines have been adopted. The California Debt Limit Allocation Committee shall not accept applications for the 2021 calendar year for bond allocations for an eligible project under this section prior to issuing, reviewing, and publishing a new tax-exempt private activity bond demand survey. A housing sponsor receiving a nonfederally subsidized allocation under subdivision (c) shall not be eligible for receipt of the housing credit allocated from the increased amount under this subparagraph. Except as provided in clause (vi), a housing sponsor receiving a nonfederally subsidized allocation under subdivision (c) shall remain eligible for receipt of the housing credit allocated from the credit ceiling amount under subparagraph
(A).
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Eligible projects for allocations under this subparagraph include any new building, as defined in Section 42(i)(4) of the Internal Revenue Code, relating to newly constructed buildings, and the regulations promulgated thereunder, excluding rehabilitation expenditures under Section 42(e) of the Internal Revenue Code, relating to rehabilitation expenditures treated as separate new building, and is federally subsidized. Eligible projects for allocations under this subparagraph also include any retrofitting and repurposing of existing nonresidential structures, including, but not limited to, hotels and motels, that were converted to residential use within the previous five years from the date of the application.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Notwithstanding any other provision of this section, for allocations pursuant to this subparagraph for the 2020 calendar year, the California Tax Credit
Allocation Committee shall consider projects located throughout the state and shall allocate housing credits, subject to the minimum federal requirements as set forth in Sections 42 and 142 of the Internal Revenue Code, the minimum requirements set forth in Sections 5033 and 5190 of the California Debt Limit Allocation Committee regulations, and the minimum set forth in Section 10326 of the Tax Credit Allocation Committee regulations, for projects that can begin construction within 180 days from award, subject to availability of funds.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
(I)
<html:span class="EnSpace"/>
Notwithstanding any other provision of this section, for allocations pursuant to this subparagraph for the 2021 calendar year and thereafter, the California Tax Credit Allocation Committee and the California Debt Limit Allocation Committee shall develop and prescribe regulations, rules, or guidelines necessary to implement a new allocation methodology that is aimed at increasing
production and containing costs, which would include a scoring system that maximizes the efficient use of public subsidy and benefit created through the private activity bond and low-income housing tax credit programs. The factors for determining the efficient use of public subsidy and benefit shall include, but not be limited to, all of the following:
</html:p>
<html:p>
(ia)
<html:span class="EnSpace"/>
The number and size of units developed including local incentives provided to increase density.
</html:p>
<html:p>
(ib)
<html:span class="EnSpace"/>
The proximity to amenities, jobs, and public transportation.
</html:p>
<html:p>
(ic)
<html:span class="EnSpace"/>
The location of the development.
</html:p>
<html:p>
(id)
<html:span class="EnSpace"/>
The delivery of housing affordable to very low and extremely low income households by the development.
</html:p>
<html:p>
(II)
<html:span class="EnSpace"/>
The efficient use of
public subsidy and benefit criteria specified in this clause shall take into account the total state subsidy provided and prioritize cost containment and increased unit production. These regulations, rules, or guidelines developed pursuant to this subparagraph shall also consider updated definitions for at-risk preservation and new construction.
</html:p>
<html:p>
(III)
<html:span class="EnSpace"/>
For bond allocations for the 2021 calendar year to projects eligible for an allocation under this subparagraph, the California Debt Limit Allocation Committee may adopt emergency regulations.
</html:p>
<html:p>
(IV)
<html:span class="EnSpace"/>
The California Tax Credit Allocation Committee shall consider amending the regulations establishing a scoring system, as required by this clause, to also grant, for farmworker housing as defined in subdivision (h) of Section 50199.7 of the Health and Safety Code, maximum points to farmworker housing projects under the housing needs
category, and an initial five points in the category for site amenities beyond those required as additional thresholds.
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
Of the amount available pursuant to this subparagraph, and notwithstanding any other requirement of this section, the California Tax Credit Allocation Committee may allocate up to two hundred million dollars ($200,000,000) for housing financed by the California Housing Finance Agency under its Mixed-Income Program.
</html:p>
<html:p>
(v)
<html:span class="EnSpace"/>
(I)
<html:span class="EnSpace"/>
For the calendar years of 2024 to 2034, inclusive, of the amount available pursuant to this subparagraph, the lesser of 5 percent of that amount or twenty-five million dollars ($25,000,000) per calendar year shall be set aside for projects to provide farmworker housing, as defined in subdivision (h) of Section 50199.7 of the Health and Safety Code, and administered consistent with the credits available pursuant to
paragraph (4).
</html:p>
<html:p>
(II)
<html:span class="EnSpace"/>
Any credits pursuant to this clause that remain unallocated following the conclusion of a funding round shall roll over to consecutive subsequent funding rounds in that calendar year with the exception that any credits that remain unallocated after the final funding round in that calendar year shall be added back to the aggregate amount of credits that may be allocated pursuant to this subparagraph.
</html:p>
<html:p>
(III)
<html:span class="EnSpace"/>
For the 2035 calendar year, and every year thereafter, of the amount available pursuant to this subparagraph, a portion of the amount allocated shall be set aside for projects to provide farmworker housing, as defined in subdivision (h) of Section 50199.7 of the Health and Safety Code. The amount set aside shall be determined by the Legislature upon consideration of the comprehensive strategy, or most recent update thereof, provided by the Department of
Housing and Community Development pursuant to subdivision (c) of Section 50408.5 of the Health and Safety Code.
</html:p>
<html:p>
(vi)
<html:span class="EnSpace"/>
(I)
<html:span class="EnSpace"/>
For any calendar year in which the California Debt Limit Allocation Committee has declared a competition for the award of tax-exempt bond authority for qualified residential rental projects, the California Tax Credit Allocation Committee may allocate some or all of the credits allocated under this subparagraph, except for any credits allocated for housing financed by the California Housing Finance Agency under its Mixed-Income Program, for nonfederally subsidized buildings eligible for credits under Section 42 of the Internal Revenue Code, relating to low-income housing credit, and shall allocate the remainder of these credits for new buildings, as defined in Section 42(i)(4) of the Internal Revenue Code, relating to new buildings, that are federally subsidized and that can begin construction within a
reasonable time, as determined by the California Tax Credit Allocation Committee.
</html:p>
<html:p>
(II)
<html:span class="EnSpace"/>
For any calendar year in which the California Debt Limit Allocation Committee has not declared a competition for the award of tax-exempt bond authority for qualified residential rental projects, projects receiving an award of credits pursuant to this subparagraph shall begin construction within a reasonable time, as determined by the California Tax Credit Allocation Committee.
</html:p>
<html:p>
(III)
<html:span class="EnSpace"/>
Notwithstanding subclauses (I) and (II), if credits available under this subparagraph remain unallocated after the final California Debt Limit Allocation Committee round for qualified residential rental projects in a given calendar year, the California Tax Credit Allocation Committee may allocate some or all of the remaining credits for nonfederally subsidized buildings eligible for credits under Section 42 of the
Internal Revenue Code, relating to low-income housing credit.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The unused housing credit ceiling, if any, for the preceding calendar years.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
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, and the regulatory 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:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
A term not less than the compliance period.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
A requirement that the agreement be recorded in the official records of the county in which the qualified low-income housing project is located.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
A provision incorporating the requirements of Section 42 of the Internal Revenue Code, relating to low-income housing credit, as modified by this section.
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(7)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(8)
<html:span class="EnSpace"/>
A provision that 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.
</html:p>
<html:p>
(j)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
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:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
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:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
The housing sponsor shall demonstrate that there is a need and demand for low-income housing in the community or region for which it is proposed.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
The housing sponsor shall have and maintain control of the site for the project.
</html:p>
<html:p>
(v)
<html:span class="EnSpace"/>
The housing sponsor shall demonstrate that the project complies with all applicable local land use and zoning ordinances.
</html:p>
<html:p>
(vi)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(vii)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The committee shall give a preference to those projects satisfying all of the threshold requirements of subparagraph (A) if both of the following apply:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
The project serves the lowest income tenants at rents affordable to those tenants.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
The project is obligated to serve qualified tenants for the longest period.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
In addition to the provisions of subparagraphs (A) and (B), the committee shall use the following criteria in allocating housing credits:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Projects serving large families in which a substantial number, as defined by the committee, of all residential units are low-income units with three or more bedrooms.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Projects providing single-room occupancy units serving very low income tenants.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
Existing projects that are “at risk of conversion,” as defined by paragraph (6) of subdivision (c).
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(v)
<html:span class="EnSpace"/>
Projects that provide tenant amenities not generally available to residents of low-income housing projects.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
Subparagraphs (B) and (C) shall not apply to projects receiving an allocation pursuant to subparagraph (B) of paragraph (1) of subdivision (g).
</html:p>
<html:p>
(k)
<html:span class="EnSpace"/>
Section 42(
<html:i>l</html:i>
) of the Internal Revenue Code, relating to certifications and other reports to secretary, shall be modified as follows:
</html:p>
<html:p>The term “secretary” shall be replaced by the term “Franchise Tax Board.”</html:p>
<html:p>
(
<html:i>l</html:i>
)
<html:span class="EnSpace"/>
In the case in which 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 years, if necessary, until the credit has been exhausted.
</html:p>
<html:p>
(m)
<html:span class="EnSpace"/>
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:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The project was not placed in service prior to 1990.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Notwithstanding paragraph (2), a project applying for an allocation under this subdivision shall be subject to the requirements of paragraph (3) of subdivision (j).
</html:p>
<html:p>
(n)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(o)
<html:span class="EnSpace"/>
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, apply to calendar years after 1989.
</html:p>
<html:p>
(p)
<html:span class="EnSpace"/>
The provisions of Section 11407(c) of Public Law 101-508, relating to election to accelerate credit, shall not apply.
</html:p>
<html:p>
(q)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
For a project that receives a preliminary reservation under this section beginning on or after January 1, 2016, a taxpayer may elect, in the manner prescribed by the California Tax Credit Allocation Committee, to sell all or any portion of any credit allowed, subject to subparagraph (B). The taxpayer may make the election to sell pursuant to this subdivision at any time before the
California Tax Credit Allocation Committee allocates a final credit amount for the project pursuant to this section, at which point the election shall become irrevocable.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
A credit that a taxpayer elects to sell all or a portion of pursuant to this subdivision shall be sold for consideration that is not less than 80 percent of the amount of the credit.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
The taxpayer that originally received the credit shall report to the California Tax Credit Allocation Committee within 10 days of the sale of the credit, in the form and manner specified by the California Tax Credit Allocation Committee, all required information regarding the purchase and sale of the credit, including the social security or other taxpayer identification number of the unrelated party or parties to whom the credit has been sold, the face amount of the credit sold, and the amount of
consideration received by the taxpayer for the sale of the credit.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The California Tax Credit Allocation Committee shall provide an annual listing to the Franchise Tax Board, in a form and manner agreed upon by the California Tax Credit Allocation Committee and the Franchise Tax Board, of the taxpayers that have sold or purchased a credit pursuant to this subdivision.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
A credit may be sold pursuant to this subdivision to more than one unrelated party.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
Notwithstanding any other law, the taxpayer that originally received the credit that is sold pursuant to paragraph (1) shall remain solely liable for all obligations and liabilities imposed on the taxpayer by this section with respect to the credit, none of which shall apply to a party to whom the credit has been sold or subsequently transferred. Parties that
purchase credits pursuant to paragraph (1) shall be entitled to utilize the purchased credits in the same manner in which the taxpayer that originally received the credit could utilize them.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
A taxpayer shall not sell a credit allowed by this section if the taxpayer was allowed the credit on any tax return of the taxpayer.
</html:p>
<html:p>
(r)
<html:span class="EnSpace"/>
The California Tax Credit Allocation Committee may prescribe rules, guidelines, or procedures necessary or appropriate to carry out the purposes of this section, including any guidelines regarding the allocation of the credit allowed under this section. Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code shall not apply to any rule, guideline, or procedure prescribed by the California Tax Credit Allocation Committee pursuant to this section.
</html:p>
<html:p>
(s)
<html:span class="EnSpace"/>
The amendments to this section made by Chapter 1222 of the Statutes of 1993 apply only to taxable years beginning on or after January 1, 1994.
</html:p>
<html:p>
(t)
<html:span class="EnSpace"/>
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 credit, remains in effect. Any unused credit may continue to be carried forward, as provided in subdivision (
<html:i>l</html:i>
), until the credit has been exhausted.
</html:p>
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</ns0:LawSection>
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</ns0:BillSection>
<ns0:BillSection id="id_09B347E0-E20F-4E34-BAA0-5D776F2AC48C">
<ns0:Num>SEC. 15.</ns0:Num>
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Section 23610.5 of the
<ns0:DocName>Revenue and Taxation Code</ns0:DocName>
is amended to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_A31434F0-16BC-4F7C-AD42-9A4E7ECF4397">
<ns0:Num>23610.5.</ns0:Num>
<ns0:LawSectionVersion id="id_90C8ADF1-2F8D-4F99-BD58-5B3C60467C6E">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
There shall be allowed as a credit against the “tax,” defined in Section 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, relating to low-income housing credit, except as otherwise provided in this section.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
“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.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
“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.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
The low-income housing project shall be located in California and shall meet either of the following requirements:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
It qualifies for a credit under Section 42(h)(4)(B) of the Internal Revenue Code, relating to special rule where 25 percent or more of building is financed with tax-exempt bonds subject to volume cap.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
(i)
<html:span class="EnSpace"/>
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, 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.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
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).
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
(i)
<html:span class="EnSpace"/>
A taxpayer shall be eligible to claim the credit commencing in the taxable year the building is placed in service and the federal credit period commences, notwithstanding that the certification pursuant to subparagraph (A) has not been issued by the California Tax Credit Allocation Committee, provided that the housing sponsor has filed a taxpayer certification with the California Tax Credit Allocation Committee and delivered a copy to the taxpayer. The amount of credit claimed
by the taxpayer shall not exceed the pro rata share with respect to the amount of credit that the taxpayer purchased or is allocated per the partnership agreement, as applicable, of the lesser of either of the following:
</html:p>
<html:p>
(I)
<html:span class="EnSpace"/>
The applicable percentages for each of the four credit years, as specified in subdivision (c), multiplied by the qualified basis of the building set forth in the preliminary reservation.
</html:p>
<html:p>
(II)
<html:span class="EnSpace"/>
The amount of credit the project is eligible for as stated in the taxpayer certification.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
The California Tax Credit Allocation Committee may, but is not required to, review the taxpayer certification and other information provided by the housing sponsor to confirm both of the following:
</html:p>
<html:p>
(I)
<html:span class="EnSpace"/>
The calculations set forth in the taxpayer
certification.
</html:p>
<html:p>
(II)
<html:span class="EnSpace"/>
The amount of credits allocated to the project is consistent with applicable California Tax Credit Allocation Committee rules and regulations for the purposes of making the certification required pursuant to subparagraph (A).
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
If the California Tax Credit Allocation Committee issues a certification pursuant to subparagraph (A) that is inconsistent with the taxpayer certification upon which a credit has been claimed, the taxpayer shall amend any previously filed tax returns to reflect the credit amount certified by the California Tax Credit Allocation Committee pursuant to subparagraph (A).
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
For purposes of this subparagraph, “taxpayer certification” means a certified statement from the certified public accountant of the housing sponsor. The taxpayer certification shall contain the amount
of the credit the project is eligible for, the taxable year the building is placed in service, and the taxable year in which the federal credit period for the building has commenced.
</html:p>
<html:p>
(v)
<html:span class="EnSpace"/>
The taxpayer shall, upon request, provide a copy of the taxpayer certification pursuant to clause (iv) or the California Tax Credit Allocation Committee’s certification pursuant to subparagraph (A), as applicable, to the Franchise Tax Board.
</html:p>
<html:p>
(vi)
<html:span class="EnSpace"/>
In the case of a failure to provide a copy of the taxpayer certification pursuant to clause (iv) or the California Tax Credit Allocation Committee’s certification pursuant to subparagraph (A), if the Franchise Tax Board so requires, no credit under this section shall be allowed for that taxable year until a copy of that certification is provided.
</html:p>
<html:p>
(vii)
<html:span class="EnSpace"/>
The changes made to this subparagraph
by the act adding this clause shall apply for taxable years beginning on or after January 1, 2023.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(E)
<html:span class="EnSpace"/>
(i)
<html:span class="EnSpace"/>
Except as described in clause (ii) or (iii), 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.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Notwithstanding clause (i), the California Tax Credit Allocation Committee may allocate the credit for buildings designated under Section 42(d)(5)(B)(v) of the Internal Revenue Code that are restricted to having 50 percent of the building’s occupants be special needs households, as defined in the California Code of Regulations by the California Tax Credit Allocation Committee,
provided that the credit allowed under this section shall not exceed 30 percent of the eligible basis of the building.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
On and after January 1, 2018, notwithstanding clause (i), the California Tax Credit Allocation Committee may allocate the credit pursuant to paragraph (7) of subdivision (c) or subparagraph (B) of paragraph (1) of subdivision (g), 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.
</html:p>
<html:p>
(F)
<html:span class="EnSpace"/>
(i)
<html:span class="EnSpace"/>
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 housing credit, are reduced by an equivalent amount.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
Section 42(b) of the Internal Revenue Code, relating to applicable percentage: 70 percent present value credit for certain new buildings; 30 percent present value credit for certain other buildings, shall be modified as follows:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
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”
</html:p>
<html:p> means for each of the first three</html:p>
<html:p> years, 9 percent of the qualified basis of the building, and for the fourth year,
3 percent of the qualified basis of the building.</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
In the case of any qualified low-income building that is a new building and is federally subsidized and receiving an allocation pursuant to subparagraph (B) of paragraph (1) of subdivision (g), the term “applicable percentage” means for each of the first three years, 9 percent of the qualified basis of the building, and for the fourth year, 3 percent of the qualified basis of the building.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
In the case of any qualified low-income building that receives an allocation after 1989 pursuant to subparagraph (A) of paragraph (1) of subdivision (g) 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”
</html:p>
<html:p> means for each of the first three</html:p>
<html:p>
years, 4 percent of the qualified basis of the building, and for the fourth year, 1 percent of the qualified basis of the building.</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
In the case of any qualified low-income building that meets all of the requirements of subparagraphs (A) through (D), inclusive, the term “applicable percentage” means 30 percent for each of the first three years and 5 percent for the fourth year. A qualified low-income building receiving an allocation under this paragraph is ineligible to also receive an allocation under paragraph (3).
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
The qualified low-income
building is at least 15 years old.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The qualified low-income building is either:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Serving households of very low income or extremely low income such that the average maximum household income as restricted, pursuant to an existing regulatory agreement with a federal, state, county, local, or other governmental agency, is not more than 45 percent of the area median gross income, as determined under Section 42 of the Internal Revenue Code, relating to low-income housing credit, adjusted by household size, and a tax credit regulatory agreement is entered into for a period of not less than 55 years restricting the average targeted household income to no more than 45 percent of the area median income.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Financed under Section 514, or 521 of the National Housing Act of 1949 (42 U.S.C. Sec. 1485).
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
The qualified low-income building would have insufficient credits under paragraphs (2) and (3) to complete substantial rehabilitation due to a low appraised value.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
The qualified low-income building will complete the substantial rehabilitation in connection with the credit allocation herein.
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
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:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
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:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
The Below-Market-Interest-Rate Program pursuant to Section 221(d)(3) of the National Housing Act, Sections 1715
<html:i>l</html:i>
(d)(3) and (5) of Title 12 of the United States Code.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
Section 236 of the National Housing Act, Section 1715z-1 of Title 12 of the United States Code.
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(v)
<html:span class="EnSpace"/>
Programs under Sections 514,
515, 516, 533, and 538 of the Housing Act of 1949 (Public Law 81-171), as amended.
</html:p>
<html:p>
(vi)
<html:span class="EnSpace"/>
The low-income housing credit program set forth in Section 42 of the Internal Revenue Code, relating to low-income housing credit, this section, and Sections 12206 and 17058.
</html:p>
<html:p>
(vii)
<html:span class="EnSpace"/>
Programs for loans or grants administered by the Department of Housing and Community Development.
</html:p>
<html:p>
(viii)
<html:span class="EnSpace"/>
Section 202 of the Housing Act of 1959 (12 U.S.C. Sec. 1701q), as amended.
</html:p>
<html:p>
(ix)
<html:span class="EnSpace"/>
Section 142(d) of the Internal Revenue Code or its predecessors.
</html:p>
<html:p>
(x)
<html:span class="EnSpace"/>
Section 147 of the Internal Revenue Code, as enacted by the Tax Reform Act of 1986 (Public Law 99-514), or as subsequently amended, including as amended by the Tax Cuts and
Jobs Act of 2017 (Public Law 115-97) and all amendments enacted prior to the Tax Cuts and Jobs Act of 2017 (Public Law 115-97).
</html:p>
<html:p>
(xi)
<html:span class="EnSpace"/>
Title I of the Housing and Community Development Act of 1974, as amended.
</html:p>
<html:p>
(xii)
<html:span class="EnSpace"/>
Title II of the Cranston-Gonzalez National Affordable Housing Act of 1990, as amended.
</html:p>
<html:p>
(xiii)
<html:span class="EnSpace"/>
Titles IV and V of the McKinney-Vento Homeless Assistance Act of 1987, as amended, including the Department of Housing and Urban Development’s Supportive Housing Program, Shelter Plus Care Program, and surplus federal property disposition program.
</html:p>
<html:p>
(xiv)
<html:span class="EnSpace"/>
The following assistance provided by counties and cities in exchange for restrictions on the maximum rents that may be charged for units within a multifamily rental housing development and on the
maximum tenant income as a condition of eligibility for occupancy of the unit subject to the rent restriction, as reflected by a recorded agreement with a county or city:
</html:p>
<html:p>
(I)
<html:span class="EnSpace"/>
Loans or grants provided using tax increment financing pursuant to the Community Redevelopment Law (Part 1 (commencing with Section 33000) of Division 24 of the Health and Safety Code).
</html:p>
<html:p>
(II)
<html:span class="EnSpace"/>
Local housing trust funds, as referred to in Section 50843 of the Health and Safety Code.
</html:p>
<html:p>
(III)
<html:span class="EnSpace"/>
The sale or lease of public property at or below market rates.
</html:p>
<html:p>
(IV)
<html:span class="EnSpace"/>
The granting of density bonuses, or concessions or incentives, including fee waivers, parking variances, or amendments to general plans, zoning, or redevelopment project area plans, pursuant to Chapter 4.3 (commencing with Section
65915) of Division 1 of Title 7 of the Government Code.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
As used in subparagraph (A), “government assistance” shall not include the use of tenant-based housing choice vouchers under subsection (o) of Section 1437f of Title 42 of the United States Code, excluding paragraph (13) relating to project-based assistance. Restrictions shall not include any rent control or rent stabilization ordinance imposed by a county or city.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
If the development is subject to restrictions on rent and income levels, 50 percent of the units are also restricted to initial occupancy by lower income households, as defined in Section 50079.5 of the Health and Safety Code.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
The restrictions on rent and income levels, excluding any restrictions recorded pursuant to paragraph (2) of subdivision (e) of Section 65863.11 or Section 65863.13
of the Government Code or in connection with interim or acquisition financing, will terminate or the federally insured mortgage or rent subsidy contract on the property is eligible for prepayment or termination any time within five years before or after the date of application to the California Tax Credit Allocation Committee.
</html:p>
<html:p>
(E)
<html:span class="EnSpace"/>
The entity acquiring the property enters into a regulatory agreement that requires the property to be operated in accordance with the requirements of Section 42 of the Internal Revenue Code and any further requirements added by the California Tax Credit Allocation Committee to implement the low-income housing tax credit established by Section 42 of the Internal Revenue Code (26 U.S.C. Sec. 42), this section, and Sections 12206 and 17058 pursuant to Chapter 3.6 (commencing with Section 50199.4) of Part 1 of Division 31 of the Health and Safety Code.
</html:p>
<html:p>
(F)
<html:span class="EnSpace"/>
The property satisfies the requirements of Section 42(e) of the Internal Revenue Code, relating to rehabilitation expenditures treated as separate new building, except that the provisions of Section 42(e)(3)(A)(ii)(I) shall not apply.
</html:p>
<html:p>
(7)
<html:span class="EnSpace"/>
On and after January 1, 2018, in the case of any qualified low-income building that is (A) farmworker housing, as defined by paragraph (2) of subdivision (h) of Section 50199.7 of the Health and Safety Code, and (B) is federally subsidized, the term “applicable percentage” means for each of the first three years, 20 percent of the qualified basis of the building, and for the fourth year, 15 percent of the qualified basis of the building.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
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:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
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:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
An amount not to exceed 8 percent of the lesser of:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
The owner equity, which 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.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Twenty percent of the adjusted basis of the building as of the close of the first taxable year of the credit period.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
Any amount allowed to be distributed under subparagraph (A) that is not available for distribution during the first 5 years of the compliance period may be accumulated and distributed any time during the first 15 years of the compliance period but not thereafter.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
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:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
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.”
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
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 1st year of credit period, shall not apply to the tax credit under this section.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Section 42(f)(3) of the Internal Revenue Code, relating to determination of applicable percentage with respect to increases in qualified basis after 1st year of credit period, is modified to read:
</html:p>
<html:p>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.</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
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:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
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, does not apply and instead the following provisions apply:
</html:p>
<html:p>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.</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
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, do not
apply to this section.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
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:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
Seventy million dollars ($70,000,000) for the 2001 calendar year, and, for the 2002 calendar year and each calendar year thereafter, 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.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Five hundred
million dollars ($500,000,000) for the 2020 calendar year, and up to five hundred million dollars ($500,000,000) for the 2021 calendar year and every year thereafter. Allocations shall only be available pursuant to this subparagraph in the 2021 calendar year and thereafter if the annual Budget Act, or if any bill providing for appropriations related to the Budget Act, specifies an amount to be available for allocation in that calendar year by the California Tax Credit Allocation Committee, and after the California Tax Credit Allocation Committee and the California Debt Limit Allocation Committee have adopted increasing production and containing regulations, rules, or guidelines to align the programs of both committees with the objective of increasing production and containing costs as described in clause (iii). The California Tax Credit Allocation Committee shall accept applications for the 2021 calendar year not sooner than 30 days after these regulations, rules, or guidelines have been adopted. The
California Debt Limit Allocation Committee shall not accept applications for the 2021 calendar year for bond allocations for an eligible project under this section prior to issuing, reviewing, and publishing a new tax-exempt private activity bond demand survey. Except as provided in clause (vi), a housing sponsor receiving a nonfederally subsidized allocation under subdivision (c) shall not be eligible for receipt of the housing credit allocated from the increased amount under this subparagraph. A housing sponsor receiving a nonfederally subsidized allocation under subdivision (c) shall remain eligible for receipt of the housing credit allocated from the credit ceiling amount under subparagraph (A).
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Eligible projects for allocations under this subparagraph include any new building, as defined in Section 42(i)(4) of the Internal Revenue Code, relating to newly constructed buildings, and the regulations promulgated thereunder, excluding
rehabilitation expenditures under Section 42(e) of the Internal Revenue Code, relating to rehabilitation expenditures treated as separate new building, and is federally subsidized. Eligible projects for allocations under this subparagraph also include any retrofitting and repurposing of existing nonresidential structures, including, but not limited to, hotels and motels, that were converted to residential use within the previous five years from the date of the application.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Notwithstanding any other provision of this section, for allocations pursuant to this subparagraph for the 2020 calendar year, the California Tax Credit Allocation Committee shall consider projects located throughout the state and shall allocate housing credits, subject to the minimum federal requirements as set forth in Sections 42 and 142 of the Internal Revenue Code, the minimum requirements set forth in Sections 5033 and 5190 of the California Debt Limit Allocation
Committee regulations, and the minimum set forth in Section 10326 of the Tax Credit Allocation Committee regulations, for projects that can begin construction within 180 days from award, subject to availability of funds.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
(I)
<html:span class="EnSpace"/>
Notwithstanding any other provision of this section, for allocations pursuant to this subparagraph for the 2021 calendar year and thereafter, the California Tax Credit Allocation Committee and the California Debt Limit Allocation Committee shall develop and prescribe regulations, rules, or guidelines, necessary to implement a new allocation methodology that is aimed at increasing production and containing costs, which would include a scoring system that maximizes the efficient use of public subsidy and benefit created through the private activity bond and low-income housing tax credit programs. The factors for determining the efficient use of public subsidy and benefit shall include, but not be
limited to, all of the following:
</html:p>
<html:p>
(ia)
<html:span class="EnSpace"/>
The number and size of units developed including local incentives provided to increase density.
</html:p>
<html:p>
(ib)
<html:span class="EnSpace"/>
The proximity to amenities, jobs, and public transportation.
</html:p>
<html:p>
(ic)
<html:span class="EnSpace"/>
The location of the development.
</html:p>
<html:p>
(id)
<html:span class="EnSpace"/>
The delivery of housing affordable to very low and extremely low income households by the development.
</html:p>
<html:p>
(II)
<html:span class="EnSpace"/>
The efficient use of public subsidy and benefit criteria specified in this clause shall take into account the total state subsidy provided and prioritize cost containment and increased unit production. These regulations, rules, or guidelines developed pursuant to this subparagraph shall also consider updated definitions for at-risk preservation
and new construction.
</html:p>
<html:p>
(III)
<html:span class="EnSpace"/>
For bond allocations for the 2021 calendar year to projects eligible for an allocation under this subparagraph, the California Debt Limit Allocation Committee may adopt emergency regulations.
</html:p>
<html:p>
(IV)
<html:span class="EnSpace"/>
The California Tax Credit Allocation Committee shall consider amending the regulations establishing a scoring system, as required by this clause, to also grant, for farmworker housing as defined in subdivision (h) of Section 50199.7 of the Health and Safety Code, maximum points to farmworker housing projects under the housing needs category, and an initial five points in the category for site amenities beyond those required as additional thresholds.
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
Of the amount available pursuant to this subparagraph, and notwithstanding any other requirement of this section, the California Tax Credit
Allocation Committee may allocate up to two hundred million dollars ($200,000,000) for housing financed by the California Housing Finance Agency under its Mixed-Income Program.
</html:p>
<html:p>
(v)
<html:span class="EnSpace"/>
(I)
<html:span class="EnSpace"/>
For the calendar years of 2024 to 2034, inclusive, of the amount available pursuant to this subparagraph, the lesser of 5 percent of that amount or twenty-five million dollars ($25,000,000) per calendar year shall be set aside for projects to provide farmworker housing, as defined in subdivision (h) of Section 50199.7 of the Health and Safety Code, and administered consistent with the credits available pursuant to paragraph (4).
</html:p>
<html:p>
(II)
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Any credits pursuant to this clause that remain unallocated following the conclusion of a funding round shall roll over to consecutive subsequent funding rounds in that calendar year with the exception that any credits that remain unallocated after
the final funding round in that calendar year shall be added back to the aggregate amount of credits that may be allocated pursuant to this subparagraph.
</html:p>
<html:p>
(III)
<html:span class="EnSpace"/>
For the 2035 calendar year, and every year thereafter, of the amount available pursuant to this subparagraph, a portion of the amount allocated shall be set aside for projects to provide farmworker housing, as defined in subdivision (h) of Section 50199.7 of the Health and Safety Code. The amount set aside shall be determined by the Legislature upon consideration of the comprehensive strategy, or most recent update thereof, provided by the Department of Housing and Community Development pursuant to subdivision (c) of Section 50408.5 of the Health and Safety Code.
</html:p>
<html:p>
(vi)
<html:span class="EnSpace"/>
(I)
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For any calendar year in which the California Debt Limit Allocation Committee has declared a competition for the award of tax-exempt
bond authority for qualified residential rental projects, the California Tax Credit Allocation Committee may allocate some or all of the credits allocated under this subparagraph, except for any credits allocated for housing financed by the California Housing Finance Agency under its Mixed-Income Program, for nonfederally subsidized buildings eligible for credits under Section 42 of the Internal Revenue Code, relating to low-income housing credit, and shall allocate the remainder of these credits for new buildings, as defined in Section 42(i)(4) of the Internal Revenue Code, relating to new buildings, that are federally subsidized and that can begin construction within a reasonable time, as determined by the California Tax Credit Allocation Committee.
</html:p>
<html:p>
(II)
<html:span class="EnSpace"/>
For any calendar year in which the California Debt Limit Allocation Committee has not declared a competition for the award of tax-exempt bond authority for qualified residential rental
projects, projects receiving an award of credits pursuant to this subparagraph shall begin construction within a reasonable time, as determined by the California Tax Credit Allocation Committee.
</html:p>
<html:p>
(III)
<html:span class="EnSpace"/>
Notwithstanding subclauses (I) and (II), if credits available under this subparagraph remain unallocated after the final California Debt Limit Allocation Committee round for qualified residential rental projects in a given calendar year, the California Tax Credit Allocation Committee may allocate some or all of the remaining credits for nonfederally subsidized buildings eligible for credits under Section 42 of the Internal Revenue Code, relating to low-income housing credit.
</html:p>
<html:p>
(2)
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The unused housing credit ceiling, if any, for the preceding calendar years.
</html:p>
<html:p>
(3)
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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.
</html:p>
<html:p>
(4)
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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.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(h)
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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.
</html:p>
<html:p>
(i)
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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:
</html:p>
<html:p>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 the regulatory 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:</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
A term not less than the compliance period.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
A requirement that the agreement be recorded in the official records of the county in which the qualified low-income housing project is located.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
A provision incorporating the requirements of Section 42 of the Internal Revenue Code, relating to low-income housing credit, as modified by this section.
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(7)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(8)
<html:span class="EnSpace"/>
A provision that 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.
</html:p>
<html:p>
(j)
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(1)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
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:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
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:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
The housing sponsor shall have and maintain control of the site for the project.
</html:p>
<html:p>
(v)
<html:span class="EnSpace"/>
The housing sponsor shall demonstrate that the project complies with all applicable local land use and zoning ordinances.
</html:p>
<html:p>
(vi)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(vii)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The committee shall give a preference to those projects satisfying all of the threshold requirements of subparagraph (A) if both of the following apply:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
The project serves the lowest income tenants at rents affordable to those tenants.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
The project is obligated to serve qualified tenants for the longest period.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
In addition to the provisions of subparagraphs (A) and (B), the committee shall use the following criteria in allocating housing credits:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Projects serving large families in which a substantial number, as defined by the committee, of all residential units are low-income units with three or more bedrooms.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Projects providing single-room occupancy units serving very low income tenants.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
Existing projects that are “at risk of conversion,” as defined
by paragraph (6) of subdivision (c).
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(v)
<html:span class="EnSpace"/>
Projects that provide tenant amenities not generally available to residents of low-income housing projects.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
Subparagraph (B) and (C) shall not apply to projects receiving an allocation pursuant to subparagraph (B) of paragraph (1) of subdivision (g).
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(k)
<html:span class="EnSpace"/>
Section 42(
<html:i>l</html:i>
) of the Internal Revenue Code, relating to certifications and other reports to secretary, shall be modified as follows:
</html:p>
<html:p>The term “secretary” shall be replaced by the term “Franchise
Tax Board.”</html:p>
<html:p>
(
<html:i>l</html:i>
)
<html:span class="EnSpace"/>
In the case in which 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 years, if necessary, until the credit has been exhausted.
</html:p>
<html:p>
(m)
<html:span class="EnSpace"/>
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:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The project was not placed in service prior to 1990.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Notwithstanding paragraph (2), a project applying for an allocation under this subdivision shall be subject to the requirements of paragraph (3) of subdivision (j).
</html:p>
<html:p>
(n)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(o)
<html:span class="EnSpace"/>
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, apply to calendar years after 1989.
</html:p>
<html:p>
(p)
<html:span class="EnSpace"/>
The provisions of Section 11407(c) of Public Law 101-508, relating to election to accelerate credit, shall not apply.
</html:p>
<html:p>
(q)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The election provided in paragraph (1):
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
May be based on any method
selected by the corporation that originally receives the credit.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Shall be irrevocable for the taxable year the credit is allowed, once made.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(r)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
For a project that receives a preliminary reservation under this section beginning on or after January 1, 2016, a taxpayer may elect, in the manner prescribed by the California Tax Credit Allocation Committee, to sell all or any portion of any credit allowed, subject to subparagraph (B). The taxpayer may make the election to sell pursuant to this subdivision at any time before the California Tax Credit Allocation Committee
allocates a final credit amount for the project pursuant to this section, at which point the election shall become irrevocable.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
A credit that a taxpayer elects to sell all or a portion of pursuant to this subdivision shall be sold for consideration that is not less than 80 percent of the amount of the credit.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
The taxpayer that originally received the credit shall report to the California Tax Credit Allocation Committee within 10 days of the sale of the credit, in the form and manner specified by the California Tax Credit Allocation Committee, all required information regarding the purchase and sale of the credit, including the social security or other taxpayer identification number of the unrelated party or parties to whom the credit has been sold, the face amount of the credit sold, and the amount of consideration received by the taxpayer for the
sale of the credit.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The California Tax Credit Allocation Committee shall provide an annual listing to the Franchise Tax Board, in a form and manner agreed upon by the California Tax Credit Allocation Committee and the Franchise Tax Board, of the taxpayers that have sold or purchased a credit pursuant to this subdivision.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
A credit may be sold pursuant to this subdivision to more than one unrelated party.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
Notwithstanding any other law, the taxpayer that originally received the credit that is sold pursuant to paragraph (1) shall remain solely liable for all obligations and liabilities imposed on the taxpayer by this section with respect to the credit, none of which shall apply to a party to whom the credit has been sold or subsequently transferred. Parties that purchase credits pursuant to paragraph (1)
shall be entitled to utilize the purchased credits in the same manner in which the taxpayer that originally received the credit could utilize them.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
A taxpayer shall not sell a credit allowed by this section if the taxpayer was allowed the credit on any tax return of the taxpayer.
</html:p>
<html:p>
(s)
<html:span class="EnSpace"/>
The California Tax Credit Allocation Committee may prescribe rules, guidelines, or procedures necessary or appropriate to carry out the purposes of this section, including any guidelines regarding the allocation of the credit allowed under this section. Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code shall not apply to any rule, guideline, or procedure prescribed by the California Tax Credit Allocation Committee pursuant to this section.
</html:p>
<html:p>
(t)
<html:span class="EnSpace"/>
Any unused credit may continue to be
carried forward, as provided in subdivision (
<html:i>l</html:i>
), until the credit has been exhausted.
</html:p>
<html:p>
(u)
<html:span class="EnSpace"/>
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 credit, remains in effect.
</html:p>
<html:p>
(v)
<html:span class="EnSpace"/>
The amendments to this section made by 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.
</html:p>
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</ns0:LawSection>
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</ns0:BillSection>
<ns0:BillSection id="id_A3215AC4-F80B-4E47-9904-7835EA879C52">
<ns0:Num>SEC. 16.</ns0:Num>
<ns0:Content>
<html:p>The Legislature finds and declares that Section 2 of this act amending Section 65588 of the Government Code addresses a matter of statewide concern rather than a municipal affair as that term is used in Section 5 of Article XI of the California Constitution. Therefore, Section 2 of this act applies to all cities, including charter cities.</html:p>
</ns0:Content>
</ns0:BillSection>
<ns0:BillSection id="id_7CFDDD21-815A-484C-8C37-04F404F7ADD8">
<ns0:Num>SEC. 17.</ns0:Num>
<ns0:Content>
<html:p>
No reimbursement is required by this act pursuant to Section 6 of Article XIII
<html:span class="ThinSpace"/>
B 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 level of service mandated by this act, within the meaning of Section 17556 of the Government Code.
</html:p>
</ns0:Content>
</ns0:BillSection>
</ns0:Bill>
</ns0:MeasureDoc>