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 10337 - Compliance

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) Regulatory Agreement. All recipients of
				Tax Credits, whether Federal only, or both Federal and State, are required to
				execute a regulatory agreement, as a condition to the Committee's making an
				allocation, which will be recorded against the property for which the Tax
				Credits are allocated, and, if applicable, will reflect all scoring criteria
				proposed by the applicant in the competition for Federal and/or State housing
				Credit Ceiling.
(1) For all projects receiving
				a reservation of competitive 9% federal tax credits on or after January 1, 2016
				for which all general partners will be Qualified Nonprofit Organizations, the
				partnership agreement shall include a Right of First Refusal ("ROFR") for one
				or more of the nonprofit general partners to purchase the project after the end
				of the 15-year federal compliance period. The price to purchase the project
				under this ROFR shall be the minimum price allowed under IRC Section
				42(i) plus any
				amounts required to be paid to the tax credit investors that remain unpaid for
				approved Asset Management Fees and required payments under the limited
				partnership agreement for tax credit adjusters that remain outstanding at the
				time of the sale. The applicant shall demonstrate compliance with this
				requirement prior to the issuance of the 8609 forms.
(2) For all projects receiving a reservation
				of 4% and 9% federal tax credits on or after January 1, 2016, the regulatory
				agreement shall require written approval of the Executive Director for any
				Transfer Event.
(3) Where a Project
				is receiving renewable project-based rental assistance or operating subsidy:
(A) the owner shall in good faith apply for
				and accept all renewals available;
(B) if the project-based rental assistance or
				operating subsidy is terminated through no fault of the owner, the property
				owner shall notify CTCAC in writing immediately and shall make every effort to
				find alternative subsidies or financing structures that would maintain the
				deeper income targeting contained in the recorded CTCAC regulatory agreement.
				Upon documenting to CTCAC's satisfaction unsuccessful efforts to identify and
				obtain alternative resources, the owner may increase rents and income targeting
				for Low-Income Units above the levels allowed by the recorded regulatory
				agreement up to the federally-permitted maximum. Rents shall be raised only to
				the extent required for Financial Feasibility, as determined by CTCAC. Where
				possible, remedies shall include skewing rents higher on portions of the
				project in order to preserve affordability for units regulated by CTCAC at
				extremely low income targeting. Any necessary rent increases shall be phased in
				as gradually as possible, consistent with maintaining the project's Financial
				Feasibility. If housing Special Needs populations, the property owner shall
				attempt to minimize disruption to existing households, and transition to
				non-Special Needs households only as necessary and upon vacancy whenever
				possible.
(4) All
				projects that receive a reservation of Tax Credits on or after January 1, 2017
				and that involve a leasehold interest shall, in addition to the regulatory
				agreement, execute a lease rider which shall be recorded in the County
				Recorder's Office for which the project is located.