California Code of Regulations › Title 4 - Business Regulations › Division 17 - California Tax Credit Allocation Committee Regulations Implementing the Federal and State Low-Income Housing Tax Credit Laws › Chapter 1 - Federal and State Low-Income Housing Tax Credit › Section 10302 - Definitions

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) Adaptive reuse. Adaptive reuse means
				retrofitting and repurposing of existing buildings that create new residential
				rental units, and expressly excludes any project that involves rehabilitation
				of any construction affecting existing residential units. Adaptive reuse may
				include retrofitting and repurposing of existing hotels or motels if the hotel
				or motel is not currently a place of residence for the occupants, and/or sites
				that received a Project Homekey allocation.
(b) AHP. The Affordable Housing Program of
				the Federal Home Loan Bank.
(c)
				Allocation. The certification by the Committee of the amount of Federal, or
				Federal and State, Credits awarded to the applicant for purposes of income tax
				reporting to the IRS and/or the California Franchise Tax Board
				("FTB").
(d) Applicable Credit
				Percentage. The monthly rate, published in IRS revenue rulings pursuant to IRC
				Section 42(b)(1),
				applicable to the Federal Program for purposes of calculating annual Tax Credit
				amounts.
(e) Bath or bathroom. A
				bath or bathroom must be equipped with an exhaust fan, a toilet, a sink, a
				shower or bathtub, and a receptacle outlet.
(f) Bedroom. A bedroom must be at least 70
				square feet, must include an interior door, a closet or free-standing wardrobe
				provided by the project owner, and at least one receptacle outlet.
(g) Capital Needs Assessment or CNA. The
				physical needs assessment report required for all rehabilitation projects,
				described in Section
				10322(h)(26)(B).
(h) Chairperson. The Chairperson of the
				California Tax Credit Allocation Committee.
(i) Committee. The California Tax Credit
				Allocation Committee ("CTCAC") or its successor.
(j) Community Foundation. A local foundation
				organized as a public charity under section
				509(a)(1) of the
				Internal Revenue Code.
(k)
				Compliance Period. That period defined by IRC Section
				42(i)(1) and
				modified by R & T Code Section
				12206(h), and
				further modified by the provisions of these regulations.
(l) Credit(s). Housing Tax Credit(s), or Tax
				Credit(s).
(m) Credit Ceiling. The
				amount specified in IRC Section
				42(h)(3)(C) for
				Federal Program purposes (including the unused credits from the preceding
				calendar year, the current year's population based credits, returned credits
				and national pool credits), and in R & T Code Section
				17058(g) for State
				Program purposes.
(n) CTCAC.
				California Tax Credit Allocation Committee.
(o) Developer Fee. All Funds paid at any time
				as compensation for developing the proposed project, to include all processing
				agent fees, developer overhead and profit, construction management oversight
				fees if provided by the developer, personal guarantee fees, syndicator
				consulting fees, and reserves in excess of those customarily required by
				multi-family housing lenders.
(p)
				Development Team. The group of professionals identified by the applicant to
				carry out the development of a Tax Credit project, as identified in the
				application pursuant to subsection
				10322(h)(5).
(q) Eligible Project. A proposed 9% Tax
				Credit project that has met all of the Basic Threshold Requirements and
				Additional Threshold Requirements described in Sections
				10325(f) and (g)
				below.
(r) Executive Director. The
				executive director of the California Tax Credit Allocation Committee.
(s) Farmworker Housing. A development of
				permanent housing for agricultural workers (as defined by California Labor Code
				Section
				1140.4(b))
				in which at least 50 percent of the units are available to, and occupied by,
				farmworkers and their households. The Committee may permit an owner to
				temporarily house non farmworkers in vacant units in the event of a disaster or
				other critical occurrence. However, such emergency shelter shall only be
				permitted if there are no pending qualified farmworker household applications
				for residency.
(t) Federally
				Subsidized. As defined by IRC Section
				42(i)(2).
(u) Federal Credit. The Tax Credit for
				low-income rental housing provided under IRC Section
				42 and implemented in California by
				the Committee.
(v) Financial
				Feasibility. As required by IRC Section
				42(m)(2) and
				further defined by these regulations in Section
				10327.
(w) FTB. State of California Franchise Tax
				Board.
(x) Hard construction costs.
				The amount of the construction contract, excluding contractor profit, general
				requirements and contractor overhead.
(y) High-Rise Project(s). A project which
				applies for a Credit reservation pursuant to Section
				10325 in which 100 percent (100%)
				of the residential units are Tax Credit Units and for which the project
				architect has certified concurrently with the submission of an application to
				the Committee that (1) one or more of the buildings in the project would have
				at least six stories; and (2) the construction period for the project is
				reasonably expected to be in excess of 18 months.
(z) Homeless. As defined by Section
				10315(b)(1) through
				(4).
(aa) Hybrid project or development. A new
				construction development constructed with separate 9% and 4% Federal Credit
				Allocations. The development must meet the conditions set forth in Section
				10325(c)(9)(A).
(bb) IRS. United States Internal Revenue
				Service.
(cc) Local Development
				Impact Fees. The amount of impact fees, mitigation fees, or capital facilities
				fees imposed by municipalities, county agencies, or other jurisdictions such as
				public utility districts, school districts, water agencies, resource
				conservation districts, etc.
(dd)
				Local Reviewing Agency. An agency designated by the local government having
				jurisdiction that will perform evaluations of proposed projects in its locale
				according to criteria set forth by the Committee.
(ee) Low-Income Unit. As defined by IRC
				Section 42(i)(3).
(ff) Market-Rate Unit. A unit other than a
				Tax Credit Unit as defined by these regulations.
(gg) MHP. Multifamily Housing Program of
				California's Department of Housing and Community Development.
(hh) "Net Project Equity" shall mean the
				total sale or refinancing proceeds resulting from a Transfer Event less the
				payment of all obligations and liabilities of the owner, including any secured
				and unsecured related and third-party debt thereof (including, without
				limitation, repayment of deferred developer fees and repayment of any advances
				made by a partner to fund operating and/or development deficits).
(ii) Net Tax Credit Factor. The estimated or
				actual equity amount raised or to be raised from a tax credit syndication or
				other instrument, not including syndication related expenses, divided by the
				total amount of Federal and State Tax Credits reserved or allocated to a
				project. The calculation must include the full ten-year amount of Federal Tax
				Credits and the total amount of State Tax Credits.
(jj) QAP. The "Low Income Housing Tax Credit
				Program Qualified Allocation Plan," as adopted in regulation Sections
				10300 et. seq., and in accordance
				with the standards and procedures of IRC Section
				42(m)(1)(B).
(kk) "Qualified Capital Needs Assessment"
				shall mean a capital needs assessment for a property subject to a Transfer
				Event dated within one hundred eighty (180) days of the proposed Transfer Event
				which (i) meets the requirements of (a) the Fannie Mae Multifamily Instructions
				for the PNA Property Evaluator, (b) Freddie Mac's Property Condition Report
				requirements in Chapter 14 of the Small Balance Loan Addendum, (c) HUD's
				Multifamily Capital Needs Assessment section in Appendix 5G of the Multifamily
				Accelerated Process Guide, or (d) Standard Guide for Property Condition
				Assessments: Baseline Property Condition Assessment Process (ASTM Designation E
				2018-08) utilizing a recognized industry standard to establish useful life
				estimates for the replacement reserve analysis, and (ii) clearly sets forth (a)
				the capital needs of the project for the next three (3) years (the "Short-Term
				Work") and the projected costs thereof, and (b) the capital needs of the
				project for the subsequent twelve (12) years (the "Long Term Work") and the
				projected contributions to reserves that will be needed to accomplish that
				work.
(ll) Qualified Nonprofit
				Organization. An organization that meets the requirements of IRC Section
				42(h)(5), whose
				exempt purposes include the development of low-income housing as described in
				IRC Section
				42, and which, if a State Tax
				Credit is requested, also qualifies under H & S Code Section
				50091.
(mm) RHS. United States Rural Housing
				Service, formerly Rural Housing and Community Development Service or RHCDS,
				formerly Farmers Home Administration or FmHA
(nn) Related Party.
(1) the brothers, sisters, spouse, ancestors,
				and direct descendants of a person;
(2) a person and corporation where that
				person owns more than 50% in value of the outstanding stock of that
				corporation;
(3) two or more
				corporations, general partnership(s), limited partnership(s) or limited
				liability corporations connected through debt or equity ownership, in which
(A) stock is held by the same persons or
				entities for
(i) at least 50% of the total
				combined voting power of all classes that can vote, or
(ii) at least 50% of the total value of
				shares of all classes of stock of each of the corporations or
(iii) at least 50% of the total value of
				shares of all classes of stock of at least one of the other corporations,
				excluding, in computing that voting power or value, stock owned directly by
				that other corporation;
(B) concurrent ownership by a parent or
				related entity, regardless of the percentage of ownership, or a separate entity
				from which income is derived;
(C)
				concurrent ownership by a parent or related entity, regardless of the
				percentage of ownership, or a separate entity where a sale-leaseback
				transaction provides the parent or related entity with income from the property
				leased or that creates an undue influence on the separate entity as a result of
				the sale-leaseback transaction;
(D)
				concurrent ownership by a parent or related entity, regardless of the
				percentage of ownership, of a separate entity where an interlocking directorate
				exists between the parent or related entity and the separate entity.
(4) a grantor and fiduciary of any
				trust;
(5) a fiduciary of one trust
				and a fiduciary of another trust, if the same person is a grantor of both
				trusts;
(6) a fiduciary of a trust
				and a beneficiary of that trust;
(7) a fiduciary of a trust and a corporation
				where more than 50% in value of the outstanding stock is owned by or for the
				trust or by or for a person who is a grantor of the trust;
(8) a person or organization and an
				organization that is tax-exempt under Subsection
				501(c)(3) or (4)
				of the IRC and that is affiliated with or controlled by that person or the
				person's family members or by that organization;
(9) a corporation and a partnership or joint
				venture if the same persons own more than:
(A)
				50% in value of the outstanding stock of the corporation; and
(B) 50% of the capital interest, or the
				profits' interest, in the partnership or joint venture;
(10) one S corporation or limited liability
				corporation and another S corporation or limited liability corporation if the
				same persons own more than 50% in value of the outstanding stock of each
				corporation;
(11) an S corporation
				or limited liability corporation and a C corporation, if the same persons own
				more than 50% in value of the outstanding stock of each corporation;
(12) a partnership and a person or
				organization owning more than 50% of the capital interest, or the profits'
				interest, in that partnership; or
(13) two partnerships where the same person
				or organization owns more than 50% of the capital interests or profits'
				interests.
The constructive ownership provisions of IRC Section
				  267 also apply to subsections
				  1 through
				  13 above. The more stringent of
				  regulations shall apply as to the ownership provisions of this section.