Notwithstanding the paragraph above, for projects which restrict for persons with Special Needs as described in Section 10325(g)(3) the greater of 1) 15 Low-Income Units or 2) 25% of the Low-Income Units, the maximum developer fee that may be included in project costs and eligible basis for 9% competitive credit new construction, rehabilitation only, or adaptive reuse applications applying under Section 10325 of these regulations is the lesser of 15% of the project's unadjusted eligible basis and 15% of the basis for non-residential costs included in the project allocated on a pro rata basis or two million eight hundred thousand dollars ($2,800,000). The maximum developer fee that may be included in project costs and eligible basis for a 9% competitive credit acquisition/rehabilitation application is the lesser of 15% of the project's unadjusted eligible construction related basis plus 5% of the project's unadjusted eligible acquisition basis and 15% for the basis for non-residential costs included in the project allocated on a pro rata basis or two million eight hundred thousand dollars ($2,800,000).
All developer fee in excess of the greater of the following shall be deferred or contributed as equity to the project:
* 15% of the project's unadjusted eligible basis, up to two million five hundred dollars ($2,500,000); or
* one million dollars ($1,000,000) plus 5% of the project's unadjusted eligible basis in excess of six million six hundred sixty six thousand six hundred sixty seven dollars ($6,666,667).
Notwithstanding the paragraph above, for projects which restrict for persons with Special Needs as described in Section 10325(g)(3) the greater of 1) 15 Low-Income Units or 2) 25% of the Low-Income Units, all developer fees in excess of the greater of the following shall be deferred or contributed as equity to the project:
* 15% of eligible basis, up to two million eight hundred thousand dollars ($2,800,000); or
* one million dollars ($1,000,000) plus 7% of eligible basis in excess of six million six hundred sixty six thousand six hundred sixty seven dollars ($6,666,667).
All developer fees in excess of the greater of the following shall be deferred or contributed as equity to the project:
15% of the project's unadjusted eligible construction related basis plus 5% of the project's unadjusted eligible acquisition basis, up to two million five hundred thousand dollars ($2,500,000); provided however, and subject to the $2,500,000 limitation in the aggregate, 15% of the project's unadjusted eligible acquisition basis will be permitted for at-risk developments meeting the requirements of section 10325(g)(4) or for other acquisition/rehabilitation projects, except for existing tax credit projects applying for a new reservation of tax credits for acquisition (i.e. resyndication), whose hard construction costs per unit in rehabilitation expenditures are at least $50,000 or where the development will restrict at least 30% of its Low Income Units for those with incomes no greater than 50% of area median and restrict rents concomitantly; or
* one million dollars ($1,000,000) plus 5% of the project's unadjusted eligible basis in excess of six million six hundred sixty-six thousand six hundred sixty seven dollar ($6,666,667).
Notwithstanding the paragraph above, for projects which restrict for persons with Special Needs as described in Section 10325(g)(3) the greater of 1) 15 Low-Income Units or 2) 25% of the Low-Income Units, all developer fees in excess of the greater of the following shall be deferred or contributed as equity to the project:
* 15% of the project's unadjusted eligible construction related basis plus 5% of the project's unadjusted eligible acquisition basis, up to two million eight hundred thousand dollars ($2,800,000); provided however, and subject to the $2,800,000 limitation in the aggregate, 15% of the project's unadjusted eligible acquisition basis will be permitted for at-risk developments meeting the requirements of section 10325(g)(4) or for other acquisition/rehabilitation projects, except for existing tax credit projects applying for a new reservation of tax credits for acquisition (i.e. resyndication), whose hard construction costs per unit in rehabilitation expenditures are at least $50,000 or where the development will restrict at least 30% of its Low Income Units for those with incomes no greater than 50% of area median and restrict rents concomitantly; or
* one million dollars ($1,000,000) plus 7% of the project's unadjusted eligible basis in excess of six million six hundred sixty-six thousand six hundred sixty seven dollars ($6,666,667).
Deferred developer fee notes and/or agreements must be included in the placed-in-service application and the interest rates of such notes shall not exceed eight percent (8%).
Exceptions to limits.
A twenty percent (20%) increase to limits for a development that is paid for in whole or in part out of public funds and is subject to a legal requirement for the payment of state or federal prevailing wages or financed in part by a labor-affiliated organization that requires the employment of construction workers who are paid at least state or federal prevailing wages. An additional five percent (5%) increase to the unadjusted eligible basis shall be available for projects that certify that they are subject to a project labor agreement within the meaning of Section 2500(b)(1) of the Public Contract Code that requires the employment of construction workers who are paid at least state or federal prevailing wages or that they will use a skilled and trained workforce, as defined in Section 25536.7 of the Health and Safety Code, to perform all onsite work within an apprenticeable occupation in the building and construction trades. All applicants under this paragraph shall certify that contractors and subcontractors will comply with Section 1725.5 of the Labor Code, if applicable;
A ten percent (10%) increase to the limits for a new construction development where parking is required to be provided beneath the residential units (but not "tuck under" parking) or through construction of an on-site parking structure of two or more levels;
A two percent (2%) increase to the limits where a day care center is part of the development;
A two percent (2%) increase to the limits where 100% of the Low-Income Units are for special needs populations;
A ten percent (10%) increase to the limits for a development wherein at least 95% of the project's upper floor units are serviced by an elevator.
A fifteen percent (15%) increase to the limits for a development wherein at least 95% of the building(s) is constructed as Type I as defined in the California Building Code, in which case, the Type III increase below (10%) shall not be allowed.
A ten percent (10%) increase to the limits for a development wherein at least 95% of the building(s) is constructed as (1) a Type III as defined in the California Building Code, or (2) a Type III/Type I combination, in which case, the Type I increase above (15%) shall not be allowed.
With the exception of the prevailing wage increase, the Local Impact Fee increase, and the special needs increase, in order to receive the basis limit increases by the corresponding percentage(s) listed above, a certification signed by the project architect shall be provided within the initial and placed-in-service application confirming that item(s) listed above will be or have been incorporated into the project design, respectively.
Compliance and Verification: For placed-in-service applications, in order to receive the increase to the basis limit, the application shall contain a certification from a HERS, GreenPoint, NGBS Green Verifier, PHIUS, Passive House, or Living Building Challenge Rater, or from a LEED for Homes Green Rater verifying that item(s) listed above have been incorporated into the project, except that items (5) through (8) may be verified by the project architect. For item (1), the applicant must submit a Sustainable Building Method Workbook. The applicant shall use CBECC/CUAC software approved by the California Energy Commission to determine the solar output and the tenants' estimated usage. For item (2), the energy analyst shall provide documentation of the load serving the common area and the output calculations of the photovoltaic generation. For items (3) and (4), the applicant must submit a Sustainable Building Method Workbook with the original application and the placed-in-service application. For item (5), the Rater, architect, landscape architect, or water system engineer shall certify that reclaimed water, greywater, or rainwater systems have been installed and are functioning to supply sufficient irrigation to the property to meet the standards under normal conditions. Failure to incorporate the features, or to submit the appropriate documentation may result in a reduction in credits awarded and/or an award of negative points.
An applicant may choose to utilize the census tract, or census block group as applicable, resource designation from the CTCAC/HCD Opportunity Maps in effect when the initial site control was obtained up to seven calendar years prior to the application.
Once established in the initial application, the acquisition cost of a new construction site shall not increase except as provided below for land and improvements donated or leased. Except as allowed pursuant to Section 10322(h)(9)(A) or by a waiver pursuant to this section below for projects basing cost on assumed debt, neither the purchase price nor the basis associated with existing improvements, if any, shall increase during all subsequent reviews including the placed-in-service review.
If land or land and improvements (real property) are donated to the general partner or member of the project owner and if approved by CTCAC in advance, the general partner or member may sell the real property to the project for an amount equal to the donated value established in the application provided that: there must be a seller carryback loan for the full amount of the sale, the loan must be "soft," having a term of at least 15 years, a below market interest rate and interest accrual, and be either fully deferred or require only residual receipts payments for the loan term. Alternatively, the value may be a capital contribution of a general partner or member. Once established in the initial application, the donated value of the real property shall not increase.
If land or land and improvements (real property) are donated or are leased for a mandatory lease payment of $100 per year or less, and if approved by CTCAC in advance, the donation value established in the application may be a capital contribution of a general partner or member. Once established in the initial application, the donated value of the real property/lease shall not increase.
The value of donated land, including land donated as part of an inclusionary housing ordinance, must be evidenced by an appraisal pursuant to Section 10322(h)(9).
The Executive Director may approve a waiver to underwrite the project with a purchase price in excess of the appraised value where (i) a local governmental entity is purchasing, or providing funds for the purchase of land for more than its appraised value in designated revitalization area when the local governmental entity has determined that the higher cost is justified, or (ii) the purchase price does not exceed the sum of third-party debt encumbering the property that will be assumed or paid off.
For tax-exempt bond-funded properties receiving credits under Section 10326 only or in combination with State Tax Credits and exercising the option to forgo an appraisal pursuant to Section 10322(h)(9)(A), no sales agreement or purchase contract is required, and CTCAC shall approve a reasonable proration of land and improvement value consistent with similar projects in the market area.
For purposes of the pro forma projections only, the application form Subsidy Contract Calculation may utilize post-rehabilitation rental subsidy contract rent assumptions when applicable.
Minimum operating expenses shall include expenses of all manager units and market rate units, and must be at least equal to the minimum operating expense standards published by the Committee staff annually. The published minimums shall be established based upon periodic calculations of operating expense averages annually reported to CTCAC by existing tax credit property operators. The minimums shall be displayed by region, and project type (including large family, senior, and Special Needs), and shall be calculated at the reported average or at some level discounted from the reported average. The Executive Director may, in his/her sole discretion, utilize operating expenses up to 15% less than required in this subsection for underwriting when the equity investor and the permanent lender are in place and provide evidence that they have agreed to such lesser operating expenses. These minimum operating expenses do not include property taxes, replacement reserves, depreciation or amortization expense, compliance monitoring or lender fees, or the costs of any site or service amenities.
Special needs projects that are less than 100% special needs shall prorate the operating expense minimums, using the special needs operating expenses for the special needs units, and the other applicable operating expense minimums for the remainder of the units.
9% credit applications without a HUD subsidy layering review: A pro forma statement utilizing CTCAC underwriting requirements and submitted to CTCAC at initial application; application at 180 days or 194 days pursuant to Section 10328(c); and placed in service application review must demonstrate that this limitation is not exceeded during the first three years of the project's operation.
All other applications: A pro forma statement utilizing CTCAC underwriting requirements and submitted to CTCAC at initial application; application at 180 days or 194 days pursuant to Section 10328(c); and if applicable, application at subsidy layering review must demonstrate that this limitation is not exceeded during the first three years of the project's operation. For these applications, effective November 1, 2019 CTCAC underwriting requirements for placed in service applications currently under review pursuant to Section 10322(i) are eliminated.
Cal. Code Regs. Tit. 4, § 10327
Note: Authority cited: Section 50199.17, Health and Safety Code. Reference: Sections 12206, 17058 and 23610.5, Revenue and Taxation Code; and Sections 50199.4, 50199.5, 50199.6, 50199.7, 50199.8, 50199.9, 50199.10, 50199.11, 50199.12, 50199.13, 50199.14, 50199.15, 50199.16, 50199.17, 50199.18, 50199.20, 50199.21 and 50199.22, Health and Safety Code.
Note: Authority cited: Section 50199.17, Health and Safety Code. Reference: Sections 12206, 17058 and 23610.5, Revenue and Taxation Code; and Sections 50199.4, 50199.5, 50199.6, 50199.7, 50199.8, 50199.9, 50199.10, 50199.11, 50199.12, 50199.13, 50199.14, 50199.15, 50199.16, 50199.17, 50199.18, 50199.20, 50199.21 and 50199.22, Health and Safety Code.
2. Amendment of subsections (c)(2)(C), (c)(3), (c)(5)(H), (c)(8), (f) and (g)(9) filed 7-21-98; operative 11-20-97 and 12-11-97 pursuant to Health and Safety Code section 50199.17 (Register 98, No. 30).
3. Amendment filed 7-26-99; operative 6-3-99 pursuant to Health and Safety Code section 50199.17 (Register 99, No. 31).
4. Readoption of emergency action filed 7-26-99, operative 6-3-99; filed 4-3-2000 as an emergency; operative 10-12-99 pursuant to Health and Safety Code section 50199.17 (Register 2000, No. 14).
5. Readoption of emergency action filed 4-3-2000, operative 10-12-99; filed 4-3-2000 as an emergency; operative 2-9-2000 pursuant to Health and Safety Code section 50199.17, with amendment of section (Register 2000, No. 14).
6. Emergency readoption without change filed 9-22-2000 of an action originally filed 4-3-2000; operative 6-9-2000 pursuant to Health and Safety Code section 50199.17 (Register 2000, No. 38).
7. Emergency readoption without change filed 10-23-2000 of an action originally filed 4-3-2000; operative 9-27-2000 pursuant to Health and Safety Code section 50199.17 (Register 2000, No. 43).
8. Emergency amendment effective pursuant to Health and Safety Code section 50199.17 upon adoption by the Committee on February 16, 2001, filed with the Secretary of State on March 5, 2001 (Register 2001, No. 10).
EDITOR'S NOTE: On December 20, 2000, the Committee adopted and made effective an emergency amendment to an earlier version of this regulation; this amendment was superseded by the February 16, 2001 amendment. The December 20, 2000 amendment was filed with the Secretary of State on March 5, 2001; it was not printed in the California Code of Regulations.
9. Emergency readoption without change filed 11-19-2001 of an action most recently filed 3-5-2001; operative 9-17-2001 pursuant to Health and Safety Code section 50199.17 (Register 2001, No. 47).
10. Emergency adoption effective pursuant to Health and Safety Code section 50199.17 upon adoption by the Committee on March 19, 2003, filed with the Secretary of State on 5-8-2003 (Register 2003, No. 19).
EDITOR'S NOTE: These March 19, 2003 emergency regulations supersede prior emergency regulations adopted and made effective by the Committee on January 29, 2003. The January 29 emergency regulations were filed with the Secretary of State on May 8, 2003, but were never printed in the California Code of Regulations.
11. Emergency adoption effective pursuant to Health and Safety Code section 50199.17 upon adoption by the Committee on February 18, 2004, filed with the Secretary of State on 4-26-2004. These February 18, 2004 emergency regulations supersede prior emergency regulations (Register 2004, No. 18).
12. Emergency adoption effective pursuant to Health and Safety Code section 50199.17 upon adoption by the Committee on June 16, 2004, filed with the Secretary of State on 7-19-2004. These June 16, 2004 emergency regulations supersede prior emergency regulations (Register 2004, No. 30).
13. Emergency adoption effective pursuant to Health and Safety Code section 50199.17 upon adoption by the Committee on October 5, 2004, filed with the Secretary of State on 12-16-2004. These October 5, 2004 emergency regulations supersede prior emergency regulations (Register 2004, No. 51).
14. Emergency adoption effective pursuant to Health and Safety Code section 50199.17 upon adoption by the Committee on February 16, 2005, filed with the Secretary of State on 4-4-2005. These February 16, 2005 emergency regulations supersede prior emergency regulations (Register 2005, No. 14).
15. Emergency readoption of action adopted by the Committee 2-16-2005 and filed with the Secretary of State 4-4-2005; refiled 11-1-2005; readopted by the Committee and effective 9-28-2005 pursuant to Health and Safety Code section 50199.17 (Register 2005, No. 44).
16. Emergency adoption filed 3-23-2006; conclusively presumed to be an emergency and effective upon adoption by the Committee on 1-18-2006 pursuant to Health and Safety Code section 50199.17(c) and (d). This filing supercedes prior emergency regulations and is exempt from the Administrative Procedure Act except as provided in Health and Safety Code section 50199.17(a) and (b) (Register 2006, No. 12).
17. New section replacing prior emergency adoption filed 7-22-2010; operative 2-17-2010. Submitted to OAL for printing only pursuant to Health and Safety Code section 50199.17 (Register 2010, No. 30).
18. Amendment of subsections (c)(1), (c)(2)(C) and (c)(5)(B), new subsections (c)(5)(B)(1)-(9), amendment of subsection (c)(5)(D), repealer of subsection (c)(5)(E) and amendment of subsections (c)(9) and (d) filed 4-18-2011; operative date of the amendments is immediately upon adoption by the committee pursuant to Health and Safety Code section 50199.17(c) (Register 2011, No. 16).
19. Amendment of subsections (c)(2)-(c)(2)(A), (c)(2)(B), (c)(6), (f) and (f)(6) filed 4-11-2012; operative upon adoption by the committee on 2-1-2012 pursuant to Health and Safety Code section 50199.17(c) (Register 2012, No. 15).
20. Amendment of subsections (c)(5)(A), (c)(7) and (g)(1) filed 3-19-2013; operative upon adoption by the California Tax Credit Allocation Committee on 1-23-2013 pursuant to Health and Safety Code section 50199.17(c). Submitted to OAL for printing only (Register 2013, No. 12).
21. Amendment filed 3-28-2014; operative upon adoption by the California Tax Credit Allocation Committee on 1-29-2014 pursuant to Health and Safety Code section 50199.77(c). Submitted to OAL for printing only (Register 2014, No. 13).
22. Amendment of subsections (c)(2)(B), (c)(2)(C), (c)(5)(B)(3) and (g)(6) filed 5-7-2015; operative upon adoption by the California Tax Credit Allocation Committee on 1/21/2015 pursuant to Health and Safety Code section 50199.17(c). Submitted to OAL for printing only (Register 2015, No. 19).
23. Amendment of subsections (c)(2)(B)-(c)(2)(B)(ii), (c)(5)(A), (c)(5)(B)(3) and (c)(5)(B)(9), new subsection (c)(5)(E), amendment of subsection (c)(6), new subsection (c)(9), amendment of subsections (d)(1) and (g)(6) and new subsection (g)(8) filed 12-28-2015; operative upon adoption by the Tax Credit Allocation Committee on 10/21/2015 pursuant to Health and Safety Code section 50199.17(c). Submitted to OAL for filing and printing only pursuant to Health and Safety Code section 50199.17 (Register 2016, No. 1).
24. Amendment of subsection (a), subsections within subsection (c) and subsection (d)(1), new subsection (d)(3) and amendment of subsections (g) and (g)(6)-(7) filed 2-9-2017; operative upon adoption by the Tax Credit Allocation Committee on 12/14/2016 pursuant to Health and Safety Code section 50199.17(c). Submitted to OAL for filing and printing only pursuant to Health and Safety Code section 50199.17(c) (Register 2017, No. 6).
25. Amendment of subsections within subsection (c) and subsections (f), (g)(1), (g)(3) and (g)(6) filed 2/22/2018; operative upon adoption by the Tax Credit Allocation Committee on 12-13-2017 pursuant to Health and Safety Code section 50199.17(c). Submitted to OAL for filing and printing only pursuant to Health and Safety Code section 50199.17 (Register 2018, No. 8).
26. Amendment of subsections (c)(2)(C), (c)(5)(B)(8), (c)(6), (c)(6)(B), (c)(7) and (c)(7)(A), repealer of subsection (c)(7)(B), subsection relettering, amendment of newly designated subsection (c)(7)(B) and subsections (c)(9), (f), (g)(3), (g)(6) and (g)(7) filed 2-7-2019; operative upon adoption by the California Tax Credit Allocation Committee on 12-12-2018 pursuant to Health and Safety Code section 50199.17(c). Submitted to OAL for filing and printing only pursuant to pursuant to Health and Safety Code section 50199.17 (Register 2019, No. 6).
27. Amendment of subsections (a), (c)(2)(A)-(c)(2)(A)(ii), repealer of subsection (c)(2)(A)(iii), amendment of subsections (c)(5)(A), (c)(5)(B)(3) and (c)(9), repealer of subsections (c)(10)-(c)(10)(D) and amendment of subsections (g) and (g)(6) filed 12/23/2019; operative upon adoption by the committee on 10-28-2019 pursuant to Health and Safety Code section 50199.17(c). Submitted to OAL for filing and printing only pursuant to Health and Safety Code section 50199.17 (Register 2019, No. 52).
28. Amendment of subsection (c)(5)(F) and new subsection (d)(4) filed 8-14-2020; operative 6/17/2020. Submitted to OAL for filing and printing only pursuant to Health and Safety Code section 50199.17 (Register 2020, No. 33).
29. Amendment of subsections (c)(2)(A)-(D), new subsection (c)(2)(E), amendment of subsections (c)(5)(A), (c)(6), (c)(6)(A), (c)(7), (f) and (g)(1), repealer and new subsection (g)(1)(A), new subsection (g)(1)(B) and amendment of Note filed 2-26-2021; operative upon adoption by the California Tax Credit Allocation Committee on 12-20-2020 pursuant to Health and Safety Code section 50199.17(c). Submitted to OAL for filing and printing only pursuant to Health and Safety Code section 50199.17 (Register 2021, No. 9).
30. Amendment of subsection (d)(4) filed 7-29-2021; operative upon adoption by the California Tax Credit Allocation Committee on 6-16-2021 pursuant to Health and Safety Code section 50199.17(c). Submitted to OAL for filing and printing only pursuant to Health and Safety Code section 50199.17 (Register 2021, No. 31).
31. Amendment of subsections (c)(2)(E), (c)(5) and (c)(5)(B)(3) filed 8-8-2022; operative upon adoption by the California Tax Credit Allocation Committee on 7-20-2022 pursuant to Health and Safety Code section 50199.17(c). Submitted to OAL for filing and printing only pursuant to Health and Safety Code section 50199.17 (Register 2022, No. 32).
32. Amendment of subsection (c)(5)(F) filed 2-8-2023 as an emergency; operative 2/8/2023 (Register 2023, No. 6). A Certificate of Compliance must be transmitted to OAL by 8-7-2023 or emergency language will be repealed by operation of law on the following day.
33. Amendment of subsections (a), (c)(2)(C), (c)(5)(A), (c)(5)(B)(3), (c)(5)(F), (c)(6)-(c)(6)(B), (d) and (g)(1) filed 3-13-2023; operative upon adoption by the California Tax Credit Allocation Committee on 1-18-2023 pursuant to Health and Safety Code section 50199.17. Submitted to OAL for filing and printing only pursuant to Government Code section 11343.8 (Register 2023, No. 11).
34. Although 2-8-2023 emergency order was scheduled to expire by operation of law on 8-8-2023, amendment replacing 2-8-2023 emergency order filed 6/21/2023; operative upon adoption by the California Tax Credit Allocation Committee on 5-10-2023 pursuant to Health and Safety Code section 50199.17(c). Submitted to OAL for filing and printing only pursuant to Government Code section 11343.8 (Register 2023, No. 25).
35. Amendment of subsections (c)(2)-(c)(2)(A), (c)(2)(C), (c)(3)-(4), (c)(5)(B)(9), (c)(6) and (c)(8) filed 3-12-2024; operative 1/24/2024 upon adoption by the California Tax Credit Allocation Committee pursuant to Health and Safety Code section 50199.17(c). Submitted to OAL for filing and printing only pursuant to Government Code section 11343.8 (Register 2024, No. 11).
36. Amendment of subsections (c)(2)(A) and (c)(2)(B)(i)-(ii) and new subsection (c)(2)(B)(iii) filed 5-20-2024; operative upon adoption by the California Tax Credit Allocation Committee on 4/3/2024 pursuant to Health and Safety Code section 50199.17(c). Submitted to OAL for filing and printing only pursuant to Government Code section 11343.8 (Register 2024, No. 21).