California Code of Regulations › Title 18 - Public Revenues › Division 1 - State Board of Equalization-Property Tax (California Department of Tax and Fee Administration - Timber Yield Tax, See Chapter 11) › Chapter 2 - Assessment › Article 3 - Exemptions and Immunities › Section 140.1 - Requirements for Managing General Partner of Limited Partnership for Welfare Exemption for Low-Income Housing Properties

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) Definitions. The definitions set forth in
				  this regulation shall govern the construction of Revenue and Taxation Code
				  section
				  214,
				  subdivision (g), which provides the requirements for the welfare exemption for
				  low-income housing properties owned by a limited partnership in which the
				  managing general partner is an eligible nonprofit corporation or eligible
				  limited liability company.
(1) "General
				  partner" means "general partner" as defined by section
				  15901.02, subdivision (m) of the
				  Corporations Code.
(2) "Limited
				  partner" means "limited partner" as defined by section
				  15901.02, subdivision (p) of the
				  Corporations Code.
(3) "Limited
				  partnership" means a "limited partnership" as defined by section
				  15901.02, subdivision (q) of the
				  Corporations Code, or a "foreign limited partnership" as defined by section
				  15901.02, subdivision (k) of the
				  Corporations Code.
(4) "Limited
				  partnership agreement" means any valid written agreement of the partners as to
				  the affairs of a limited partnership and the conduct of its business, including
				  all amendments thereto.
(5)
				  "Majority in interest of the general partners" means more than 50 percent of
				  the interests of the general partners, and does not include the interests of
				  any of the limited partners, in the current profits derived from business
				  operations of the limited partnership.
(6) "Managing general partner" means a
				  general partner that:
(A) is a nonprofit
				  corporation, or an eligible limited liability company meeting the requirements
				  of Revenue and Taxation Code section
				  214,
				  designated in the limited partnership agreement as the "managing general
				  partner" of the limited partnership;
(B) is authorized to receive a partnership
				  management fee, or similar form of compensation, payable in the amount and the
				  manner set forth in the limited partnership agreement or other agreement
				  executed by all of the general partners for performing its duties;
(C) has "material participation," as defined
				  in subdivision (a)(7) below, in the control, management, and direction of the
				  limited partnership's business; and
(D) the officers and directors of the
				  for-profit general partners, for-profit limited partners, or any of its
				  for-profit affiliates, do not, as individuals or collectively, have a
				  controlling vote or majority interest in the nonprofit managing general
				  partner.
(7) "Material
				  participation" means that the limited partnership agreement or other agreement
				  executed by all of the general partners expressly provides that the managing
				  general partner:
(A) has a right to vote in
				  all the "major decisions," defined in subdivision (a)(8) below;
(B) performs "substantial management duties,"
				  defined in subdivision (a)(10) below;
(C) directly, or indirectly under its
				  supervision, manages the limited partnership;
(D) annually conducts a physical inspection
				  of the low-income housing property to ensure that the property is being used as
				  low-income housing and meets all of the requirements set forth in Regulation
				  140; and
(E) annually submits a
				  certification to the county assessor for the county in which the property is
				  located that the low-income housing property meets all of the requirements set
				  forth in Regulation 140.
(8) "Major decisions" means those acts, if
				  any, that require a vote of a majority in interest of the general
				  partners.
(9) "Partner" means a
				  limited or general partner.
(10)
				  "Substantial management duties" means that the managing general partner
				  actually performs five or more of the following partnership management duties
				  on behalf of the limited partnership:
(A)
				  rents, maintains and repairs the low-income housing property, or if such duties
				  are delegated to a property management agent, participates in hiring and
				  overseeing the work of the property management agent;
(B) participates in hiring and overseeing the
				  work of all persons necessary to provide services for the management and
				  operation of the limited partnership business;
(C) executes and enforces all contracts
				  executed by the limited partnership;
(D) executes and delivers all partnership
				  documents on behalf of the limited partnership;
(E) prepares or causes to be prepared all
				  reports to be provided to the partners or lenders on a monthly, quarterly, or
				  annual basis consistent with the requirements of the limited partnership
				  agreement;
(F) coordinates all
				  present and future development, construction, or rehabilitation of low-income
				  housing property that is the subject of the limited partnership
				  agreement;
(G) monitors compliance
				  with all government regulations and files or supervises the filing of all
				  required documents with government agencies;
(H) acquires, holds, assigns or disposes of
				  property or any interest in property;
(I) borrows money on behalf of the limited
				  partnership, encumbers limited partnership assets, places title in the name of
				  a nominee to obtain financing, prepays in whole or in part, refinances,
				  increases, modifies or extends any obligation;
(J) pays organizational expenses incurred in
				  the creation of the partnership and all operational expenses;
(K) determines the amount and timing of
				  distributions to partners and establishes and maintains all required reserves;
				  and
(L) ensures that charitable
				  services or benefits, such as vocational training, educational programs,
				  childcare and after-school programs, cultural activities, family counseling,
				  transportation, meals, and linkages to health and/or social services are
				  provided or information regarding charitable services or benefits are made
				  available to the low-income housing tenants.