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§ 10322. Application Requirements.

4 CA ADC § 10322Barclays Official California Code of RegulationsEffective: April 3, 2024

Barclays 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
Effective: April 3, 2024
4 CCR § 10322
§ 10322. Application Requirements.
(a) Separate Application. Determination of completeness, compliance with all Basic and Additional Thresholds, and the scoring of the application shall be based entirely on the documents contained in the application as of the final filing deadline. A separate application is required for each project.
(b) Application forms. Applications shall be submitted on forms provided by the Committee. Applicants shall submit the most current Committee forms and supplementary materials in a manner, format, and number prescribed by the Committee.
(c) Late application. Applications received after an application-filing deadline shall not be accepted.
(d) Incomplete application. Determination of completeness, compliance with all Basic and Additional Thresholds, the scoring of the application, and any application submission requirements pursuant to these regulations and the application form shall be based on the documents contained in the application as of the final filing deadline. Application omissions may be accepted after the application-filing deadline pursuant to Section 10322(e) at the sole discretion of the Executive Director, if determined that the deficiency is an application omission of either a document existing as of the application-filing deadline, or a document certifying to a condition existing at the time of the application-filing deadline. Applications not meeting these requirements shall be considered incomplete, and shall be disqualified from receiving a reservation of Tax Credits during the cycle in which the application was determined incomplete. An applicant shall be notified by the Committee should its application be deemed incomplete and the application will not be scored.
(e) Complete application. No additional documents pertaining to: the Basic or Additional Threshold Requirements; scoring categories; and any application submission requirements pursuant to these regulations and the application form shall be accepted after the application-filing deadline unless the Executive Director, at his or her sole discretion, determines that the deficiency is an application omission of either a document existing as of the application-filing deadline, or a document certifying to a condition existing at the time of the application-filing deadline. In such cases, applicants shall be given up to five (5) business days from the date of receipt of staff notification, to submit said documents to complete the application. For application omissions, the Executive Director may request additional clarifying information from third party sources, such as local government entities, or the applicant, but this is entirely at the Executive Director's discretion. Upon the Executive Director's request, the information sources shall be given up to five (5) business days, from the date of receipt of staff notification, to submit said documents to clarify the application. The third-party sources shall certify that all evidentiary documents deemed to be missing from the application had been executed, and were in the third-party source's possession, on or prior to, the application-filing deadline.
If required documents are not submitted within the time provided, the application shall be considered incomplete and no appeal will be entertained.
(f) Application changes. Only the Committee may change an application as permitted by Sections 10317(d), 10325(c)(6)(B), and 10327(a). Any changes made by the Committee pursuant to those sections shall never increase the score or credit amount of the application as submitted, and may reduce the application's score and/or credit amount.
(g) Applications not fully evaluated. Incomplete applications or others not expected to receive a reservation of Tax Credits due to relatively low scores, may or may not be fully evaluated by the Committee.
(h) Standard application documents. The following documentation relevant to the proposed project is required to be submitted with all applications:
(1) Applicant's Statement. A completed and signed version of the CTCAC Applicant Statement signifying the responsibility of the applicant to:
(A) provide application related documentation to the Committee upon request;
(B) be familiar with and comply with Credit program statutes and regulations;
(C) hold the Committee and its employees harmless from program-related matters;
(D) acknowledge the potential for program modifications resulting from statutory or regulatory actions;
(E) acknowledge that Credit amounts reserved or allocated may be reduced in some cases when the terms and amounts of project sources and uses of funds are modified;
(F) agree to comply with laws outlawing discrimination;
(G) acknowledge that the Committee has recommended the applicant seek tax advice;
(H) acknowledge that the application will be evaluated according to Committee regulations, and that Credit is not an entitlement;
(I) acknowledge that continued compliance with program requirements is the responsibility of the applicant;
(J) acknowledge that information submitted to the Committee is subject to the Public Records Act;
(K) agree to enter with the Committee into a regulatory contract if Credit is allocated; and,
(L) acknowledge, under penalty of perjury, that all information provided to the Committee is true and correct, and that applicant has an affirmative duty to notify the Committee of changes causing information in the application or other submittals to become false.
(2) The Application form. Completion of all applicable parts of Committee-provided application forms which shall include, but not be limited to:
(A) General Application Information
(i) Credit amounts requested
(ii) minimum set-aside election
(iii) application stage selection
(iv) set-aside selection
(v) housing type
(B) Applicant Information
(i) applicant role in ownership
(ii) applicant legal status
(iii) developer type
(iv) contact person
(C) Development Team Information
(D) Subject Property Information
(E) Proposed Project Information
(i) project type
(ii) Credit type
(iii) building and unit types
(F) Land Use Approvals
(G) Development Timetable
(H) Identification and Commitment Status of Fund Sources
(I) Identification of Fund Uses
(J) Calculation of Eligible, Qualified and Requested Basis
(K) Syndication Cost Description
(L) Determination of Credit Need and Maximum Credit Allowable
(M) Project Income Determination
(N) Restricted Residential Rent and Income Proposal
(O) Subsidy Information
(P) Operating Expense Information
(Q) Projected Cash Flow Calculation
(R) Basic Threshold Compliance Summary
(S) Additional Threshold Selection
(T) Tax-exempt Financing Information
(U) Market Study
(3) Organizational documents. An organizational chart and a detailed plan describing the ownership role of the applicant throughout the low-income use period of the proposed project, and the California Secretary of State certificate for the project owner (if available). An executed limited partnership agreement may be submitted as documentation that the project ownershp entity is formed. If the project owner is not yet formed, provide the certificate for the managing general partner or the parent company of the proposed project owner. A reservation of credit cannot be made to a to-be-formed entity.
(4) Designated contact person. A contract between the applicant and the designated contact person for the applicant signifying the contact person's authority to represent and act on behalf of the applicant with respect to the Application. The Committee reserves its right to contact the applicant directly.
(5) Identification of project participants. For purposes of this Section all of the following project participants, if applicable will be considered to be members of the Development Team. The application must contain the company name and contact person, address, telephone number, and fax number of each:
(A) developer;
(B) general contractor;
(C) architect;
(D) attorney;
(E) tax professional;
(F) property management company;
(G) consultant;
(H) market analyst and/or appraiser; and
(I) CNA consultant.
If any members of the Development Team have not yet been selected at the application filing deadline, each must be named and materials required above must be submitted at the 180 or 194 day deadline described in Section 10325(c)(7).
(6) Identities of interest. Identification of any persons or entities (including affiliated entities) that plan to provide development or operational services to the proposed project in more than one capacity, and full disclosure of Related Parties, as defined.
(7) Legal description. A legal description of the subject property.
(8) Site Layout, Location, Unique Features and Surrounding Areas.
(A) A narrative description of the current use of the subject property;
(B) A narrative description of all adjacent property land uses, the surrounding neighborhood, and identification and proximity of services, including transportation
(C) Labeled photographs, or color copies of photographs of the subject property and all adjacent properties;
(D) A layout of the subject property, including the location and dimensions of existing buildings, utilities, and other pertinent features.
(E) A site or parcel map indicating the location of the subject property and showing exactly where the buildings comprising the Tax Credit Project will be situated. (If a subdivision is anticipated, the boundaries of the parcel for the proposed project must be clearly marked; and
(F) A description of any unique features of the site, noting those that may increase project costs or require environmental mitigation.
(9) Appraisals. Appraisals are required for 1) all rehabilitation applications except as noted in subsection (A), below, 2) all adaptive reuse applications, 3) all competitive applications, except for new construction projects that are on tribal trust land or that have submitted a third party purchase contract with, or evidence of a purchase from, an unrelated third party, 4) all applications seeking tiebreaker credit for donated or leased land, or land with a soft loan and 5) all new construction applications involving a land sale from a related party. For purposes of this paragraph only, a purchase contract or sale with a related party shall be deemed to be a purchase contract or sale with an unrelated party if the applicant demonstrates that the related party is acting solely as a pass-through entity and the tax credit partnership is only paying the acquisition price from the last arms-length transaction, plus any applicable and reasonable carrying costs. Appraisals shall not include the value of favorable financing.
Appraisals must be prepared by a California certified general appraiser having no identity of interest with the development's partner(s) or intended partner or general contractor, acceptable to the Committee, and include, at a minimum, the following:
(i) the highest and best use of the proposed project as residential rental property, considering any on-going recorded rent restrictions;
(ii) for rehabilitation applications, the Sales Comparison Approach and Income Approach valuation methodologies shall be used; for new construction applications, the Sales Comparison Approach shall be used; for adaptive reuse applications, the Cost Approach valuation methodology shall be used for adaptive reuse of office buildings, retail buildings, and similar, and the Sales Comparison and Income Approaches may be used for hotels, motels, and similar;
(iii) the appraiser's reconciled value, in cases that require multiple methodologies;
(iv) a value for the land of the subject property (“as if vacant”);
(v) an on-site inspection; and
(vi) a purchase contract verifying the sales price of the subject property.
(A) Rehabilitation applications. An “as-is” appraisal is required with a date of value that is within 120 days before or after the execution of: a purchase contract; for leased land, an executed development agreement negotiated between the landowner and the applicant or developer; an option agreement; any other site control document pursuant to Section 10325(f)(2); or the transfer of ownership by all the parties.
For tax-exempt bond-funded properties receiving credits under Section 10326 only or in combination with State Tax Credits, the applicant may elect to forego the appraisal required pursuant to this section and use an acquisition value equal to the sum of the third-party debt encumbering the seller's property, which may increase during subsequent reviews to reflect the actual amount.
(B) New construction applications. Projects for which an appraisal is required above shall provide an “as-is” appraisal with a date of value that is within either:
(i) 120 days before or after the execution of a purchase contract; for leased land, an executed development agreement negotiated between the landowner and the applicant or developer; an option agreement; any other site control document pursuant to Section 10325(f)(2); the transfer of ownership by all the parties, or
(ii) one year of the application date if the latest purchase contract, development agreement, option agreement, or any other site control document pursuant to Section 10325(f)(2) was executed within that year.
An amendment to an agreement does not constitute any of the agreements listed in (i) or (ii) above.
For applications with existing project-based rental subsidy, the Income Approach shall not include post-rehabilitation contract rent(s). Rent(s) used in the Income Approach, if not the existing approved contract rent, must be supported by a rent comparable study or similar. For applications with existing affordability restrictions, the Income Approach must be based on the affordability restrictions and restricted rents encumbering the property (a “restricted value”) unless all affordability restrictions will expire within five years.
CTCAC may contract with an appraisal reviewer who may review submitted appraisals. If it does so, CTCAC shall commission an appraisal review. If the appraisal review finds the submitted appraisal to be inappropriate, misleading, or inconsistent with the data reported and with other generally known information, then the reviewer shall develop his or her own opinion of value and CTCAC shall use the opinion of value established by the appraisal reviewer.
(10) Market Studies. A full market study prepared or updated within 180 days of the filing deadline by an independent third-party having no identity of interest with the development's partners, intended partners, or any other member of the Development Team described in Subsection (5) above. The study must meet the current market study guidelines distributed by the Committee, and establish both need and demand for the proposed project. CTCAC shall publicly notice any changes to its market study guidelines and shall take public comment consistent with the comment period and hearing provisions of Health and Safety Code Section 50199.17. For scattered site projects, a market study may combine information for all sites into one report, provided that the market study has separate rent comparability matrices for each site. A new construction hybrid 9% and 4% tax credit development may combine information for both component projects into one report and, if not, shall reflect the other component project as a development in the planning or construction stages.
A market study shall be updated if the proposed project rents change by more than five percent (5%), or the distribution of higher rents increases by more than 5%, or more than 12 months have passed since the most recent site inspection date of the subject property and comparable properties. All market studies shall meet all of the requirements listed in the CTCAC Market Study Guidelines as listed on the CTCAC website. If the market study does not meet the guidelines, and support sufficient need and demand for the project, the application may be considered ineligible to receive Tax Credits and may be disqualified.
For acquisition/rehabilitation projects meeting all of the following criteria, a comprehensive market study as outlined in IRS Section 42(m)(1)(A)(iii) shall mean a written statement by a third-party market analyst certifying that the project meets these criteria:
• All of the buildings in the project are subject to existing federal or state rental assistance or operating subsidies, an existing CTCAC Regulatory Agreement, or an existing regulatory agreement with a federal, state, or local public entity.
• The proposed tenant-paid rents and income targeting levels shall not increase by more than five percent (5%) (except that proposed rents and income targeting levels for units subject to a continuing state or federal project-based rental assistance contract may increase more and proposed rents and income targeting levels for resyndication projects shall be consistent with Section 10325(f)(11) or Section 10326(g)(8)).
• The project shall have a vacancy rate of no more than ten percent (10%) for special needs units and non-special needs SRO units without a significant project-based public rental subsidy and five percent (5%) for all other units at the time of the tax credit application.
(11) Construction and design description. A detailed narrative description of the proposed project construction and design, including how the design will serve the targeted population.
(12) Architectural drawings. Preliminary drawings of the proposed project, including a site plan, building elevations, and unit floor plans (including square footage of each unit). The project architect shall certify that the development will comply with building codes and the physical building requirements of all applicable fair housing laws. In the case of rehabilitation projects proceeding without an architect, the entity performing the Capital Needs Assessment shall note necessary fair housing improvements, and the applicant shall budget for and implement the related construction work. The site plan shall identify all areas or features proposed as project amenities, laundry facilities, recreation facilities and community space. Drawings shall be to a scale that clearly shows all requested information. Blueprints need not be submitted. A project applying as a High-Rise Project must include the project architect certification in accordance with the High-Rise Project definition in Section 10302.
(13) Placed-in-service schedule. A schedule of the projected placed-in-service date for each building.
(14) Identification of local jurisdiction. The following information related to the local jurisdiction within which the proposed project is located:
(A) jurisdiction or tribe (e.g., City of Sacramento)
(B) chief executive officer or tribal chairperson and title (e.g., Susan Smith, City Manager)
(C) mailing address
(D) telephone number
(E) fax number
(15) Sources and uses of funds. The sources and uses of funds description shall separately detail apportioned amounts for residential space and commercial space.
(16) Financing plan. A detailed description of the financing plan, and proposed sources and uses of funds, to include construction, permanent, and bridge loan sources, and other fund sources, including rent or operating subsidies and reserves. The commitment status of all fund sources shall be described, and non-traditional financing arrangements shall be explained.
(17) Eligible basis certification. A certification from a third party certified public accountant or tax attorney that project costs included in applicant's calculation of eligible basis are allowed by IRC Section 42, as amended, and are presented in accordance with standard accounting procedures. This must be delivered on the tax professional's corporate letterhead, in the prescribed CTCAC format and must include a statement that the Sources and Uses Budget was reviewed and that the accountant or attorney discussed the budget with the applicant as needed.
(18) Use of tax benefits description. If the Tax Credits are not to be offered to investors, a detailed explanation of how the tax benefits will be used by the applicant.
(19) Terms of syndication agreement. Written estimate(s) from syndicator(s) or financial consultants on their corporate letterhead and in the prescribed CTCAC format, of equity dollars expected to be raised for the proposed project, based on the amount of Tax Credits requested, including gross and net proceeds, pay-in schedules, syndication costs (including syndicator consulting fees), and an estimated net tax Credit factor, for both Federal and State Tax Credits if both are to be used or if State Tax Credits exchange points are requested. The syndicator shall not pay any fees or provide any other financial or other substantive benefit to a partnership developer unless all such fees or benefits are fully and completely disclosed to CTCAC in the Executed Letter of Intent.
(20) Tax Credit certification. If the Tax Credits are not to be syndicated, a letter from a third party certified public accountant establishing the Tax Credit actor.
(21) Utility allowance estimates. Current utility allowance estimates consistent with 26 CFR Section 1.42-10. The applicant must indicate which components of the utility allowance schedule apply to the project. For buildings that are using an energy consumption model utility allowance estimate, the estimate shall be calculated using the most recent version of the California Utility Allowance Calculator (CUAC) developed by the California Energy Commission (CEC), and incorporated in the CEC's compliance program (CBECC). The CUAC estimate shall be signed by a California Association of Building Energy Consultants (CABEC) Certified Energy Analyst (CEA). Measures that are used in the CUAC that require field verification shall be verified by a certified HERS Rater, in accordance with current HERS regulations. Use of CUAC is limited to (i) new construction projects, (ii) rehabilitation projects applying for tax credits for which the rehabilitation improves energy efficiency by at least 20%, as determined consistent with the requirements of Section 10325(c)(5)(D) and (G), or installs solar generation that offsets 50% of tenant loads, as determined consistent with the requirements of Section 10325(c)(5)(G), and (iii) existing tax credit projects with new photovoltaics installed through a solar program administered by a municipal utility or joint powers authority, which offsets tenants' electrical load, and which includes site installation verification by a qualified HERS Rater. Projects utilizing the CUAC are approved for use upon the field verifications being completed. For projects using the CUAC where the field verification has not been completed prior to occupancy, the project must use an approved utility allowance source per 26 CFR Section 1.42-10 until the field verification is completed. Owners shall provide the tenants with a 90 day notification prior to the effective date with an informative summary about the current utility allowance and the proposed CUAC allowances before the utility allowances can be used in determining the gross rent of rent-restricted units. For projects applying for tax credits, the CUAC with supporting documentation shall be submitted in the Placed-in-service application required in Section 10322(i). The CUAC and supporting documentation requires a quality control review and CTCAC approval following submission in the Placed-in-service application. For existing tax credit projects not applying for tax credits, the CUAC with supporting documentation shall be submitted to CTCAC upon field verification completion for a quality control review and CTCAC approval. CTCAC will submit modeled CUAC utility allowance estimates to a quality control reviewer and shall establish a fee to cover the costs for this review.
(22) Certification of subsidies. The applicant must certify as to the full extent of all Federal, State, and local subsidies which apply (or for which the taxpayer expects to apply) with respect to the proposed project. (IRC Section 42(m)(2)(C)(ii)) If rental assistance, operating subsidies or annuities are proposed, all related commitments that secure such funds must be provided. Tax-Exempt Bond Projects may receive a reservation of tax credits with the condition to provide the applicable subsidy commitment no later than the CDLAC bond issuance deadline. The source, monthly contract rent, annual amount (if applicable), term, number of units receiving assistance, and expiration date of each subsidy must be included.
(23) Cash flow projection. A 15-year projection of project cash flow. Separate cash flow projections shall be provided for residential and commercial space. If a capitalized rent reserve is proposed to meet the underwriting requirements of Section 10327, it must be included in the cash flow projections. Use of a capitalized rent reserve is limited to Special Needs projects, projects applying under the Non-profit Homeless Assistance set-aside, HOPE VI projects, and Section 8 project based projects.
(24) Self-scoring sheet as provided in the application.
(25) Acquisition Tax Credits application. Applicants requesting acquisition Tax Credits shall provide:
(A) a chain of title report or, for tribal trust land, an attorney's opinion regarding chain of title; and
(B) if applicable, an applicant statement that the acquisition is exempt from, or a third-party tax attorney's opinion stating that the acquisition meets the requirements of IRC Section 42(d)(2)(B)(ii) as to the 10-year placed-in-service rule; or,
(C) if a waiver of the 10-year ownership rule is necessary, a letter from the appropriate Federal official that states that the proposed project qualifies for a waiver under IRC Section 42(d)(6).
(26) Rehabilitation application. Applicants proposing rehabilitation of an existing structure shall provide:
(A) An independent, third-party appraisal prepared and submitted with the preliminary reservation application consistent with the guidelines in Section 10322(h)(9).
(B) A Capital Needs Assessment (“CNA”) performed within 180 days prior to the application deadline (except as provided in Section 10322(h)(35)) that details the condition and remaining useful life of the building's major structural components, all necessary work to be undertaken and its associated costs, as well as the nature of the work, distinguishing between immediate and long-term repairs. The Capital Needs Assessment shall also include a pre-rehabilitation 15-year reserve study, indicating anticipated dates and costs of future replacements of all current major building components. The CNA must be prepared by the project architect, as long as the project architect has no identity of interest with the developer, or by a qualified independent 3rd party who has no identity of interest with any of the members of the Development Team. An adaptive reuse application is not required to submit a CNA.
(27) Acquisition of Occupied Housing application. Applicants proposing acquisition of occupied rental residential housing shall provide all existing income, rent and family size information for the current tenant population.
(28) Tenant relocation plan. In addition to any other applicable relocation requirements, applicants proposing rehabilitation or demolition of occupied housing shall comply with the requirements of the California Relocation Assistance Law, California Government Code Section 7260 et seq, or, if the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 already applies to the project, pursuant to this federal law. Applicants shall provide an explanation of the relocation requirements that they are complying with, and a detailed relocation plan consistent with one of the above-listed relocation standards including an itemized relocation cost estimate that calculates the tenant relocation expenses required pursuant to the applicable California or federal relocation law. The relocation plan must also address the potential displacement of current tenants who do not meet the CTCAC income eligibility requirements or who will receive a rent increase exceeding five percent (5%). The relocation plan must include: a detailed description of proposed temporary onsite or offsite relocation and any corresponding relocation payments for tenants who meet CTCAC income eligibility requirements; an estimate of the number of current tenants who do not meet CTCAC income eligibility requirements or will receive a rent increase exceeding five percent (5%), how this estimate was determined, and the estimated relocation cost; and a detailed description of how the current tenants will be provided notice and information about the required relocation assistance, including copies of such noticing document(s).
(29) Owner-occupied Housing application. Applicants proposing owner-occupied housing projects of four units or less, involving acquisition or rehabilitation, shall provide evidence from an appropriate official substantiating that the building is part of a development plan of action sponsored by a State or local government or a qualified nonprofit organization (IRC Section 42(i)(3)(E)).
(30) Nonprofit Set-Aside application. Applicants requesting Tax Credits from the Nonprofit set-aside, as defined by IRC Section 42(h)(5), shall provide the following documentation with respect to each developer and general partner of the proposed owner:
(A) IRS documentation of designation as a 501(c)(3) or 501(c)(4) corporation;
(B) proof that one of the exempt purposes of the corporation is to provide low-income housing;
(C) a detailed description of the nonprofit participation in the development and ongoing operations of the proposed project, as well as an agreement to provide CTCAC with annual certifications verifying continued involvement;
(D) a third-party legal opinion verifying that the nonprofit organization is not affiliated with, controlled by, or party to interlocking directorates with any Related Party of a for-profit organization, and the basis for said determination; and,
(E) a third-party legal opinion certifying that the applicant is eligible for the Nonprofit Set-Aside pursuant to IRC Section 42(h)(5).
(31) Rural Set-Aside application. Applicants requesting Tax Credits from the Rural set-aside, as defined by H & S Code Section 50199.21 and Section 10315(c) of these regulations, shall provide verification that the proposed project is located in an eligible rural area. Evidence that project is located in an area eligible for Section 515 financing from RHS may be in the form of a letter from RHS's national process branch.
(32) RHS Section 514, 515, HOME or CDBG-DR program applications. Rural housing applicants requesting Tax Credits for projects financed by the RHS Section 514 or 515 program or from a HOME or CDBG-DR Participating Jurisdiction shall submit evidence from RHS, or the HOME or CDBG-DR Participating Jurisdiction that such funding has been committed, and such evidence shall meet the requirements of Section 10325(f)(8).
(33) Community service facility. An applicant requesting basis for a community service facility shall submit a third-party tax attorney's opinion stating that the community service facility meets the requirements of IRC Section 42(d)(4)(C). CTCAC may use its discretion in determining whether the community service facility meets the qualifications.
(34) Mixed housing types. An applicant proposing a project to include senior housing in combination with non-senior housing shall provide a third-party legal opinion stating that the project complies with fair housing law.
(35) Reapplication documents. Notwithstanding the time sensitive document requirements, the Committee may permit the site control title report and the capital needs assessment report of an unsuccessful application to be submitted, only once, in the reapplication cycle immediately following the unsuccessful application.
(i) Placed-in-service application. Within one year of the last building placed-in-service date for new construction projects and within one year of the rehabilitation completion date for rehabilitation projects, the project owner shall submit the documents listed below. If conversion to permanent financing has not taken place, documents (2), (5), (6), (12) and (15) below shall be submitted within 60 days of the permanent financing conversion date. A regulatory agreement provided by CTCAC shall be executed and recorded in the County Recorder's Office for which the project is located and the compliance monitoring fee shall be submitted upon request from CTCAC as required by Section 10335. For projects subject to a lease rider pursuant to Section 10337(a)(4), a lease rider shall be executed and recorded in the County Recorder's Office for which the project is located. CTCAC shall determine if all conditions of the reservation have been met. Changes subsequent to the initial application, particularly changes to the financing plan and costs or changes to the services amenities, must be explained by the project owner in detail. If all conditions have been met, tax forms will be issued, reflecting an amount of Tax Credits not to exceed the maximum amount permitted by these regulations. The following must be submitted:
(1) certificates of occupancy for each building in the project (or a certificate of completion for rehabilitation projects). If acquisition Tax Credits are requested, evidence of the placed-in-service date for acquisition purposes, and evidence that all rehabilitation is completed;
(2) an audited certification, prepared and signed by an independent Certified Public Accountant identified by name, under generally accepted auditing standards, with all disclosures and notes. The Certified Public Accountant (CPA) or accounting firm shall not have acted in a manner that would impair independence as established by the American Institute of Certified Public Accountants (AICPA) Code of Professional Conduct Section 101 and the Securities and Exchange Commission (SEC) regulations 17 CFR Parts 210 and 240. Examples of such impairing services, when performed for the final cost certification client, include bookkeeping or other services relating to the accounting records, financial information systems design and implementation, appraisal or evaluation services, actuarial services, internal audit outsourcing services, management functions or human resources, investment advisor, banking services, legal services, or expert services unrelated to the audit. Both the referenced SEC and AICPA rules shall apply to all public and private CPA firms providing the final audited cost certification. In order to perform audits of final cost certifications, the auditor must have a peer review of its accounting and auditing practice once every three years consistent with the AICPA Peer Review Program as required by the California Board of Accountancy for California licensed public accounting firms (including proprietors); and make the peer review report publicly available and submit a copy to CTCAC along with the final cost certification. If a peer review reflects systems deficiencies, CTCAC may require another CPA provide the final cost certification. This certification shall:
(A) as identified by the certified public accountant, reflect all costs, in conformance with 26 CFR § 1.42-17, and expenditures for the project up to the funding of the permanent loan as well as all the sources and amounts of all permanent funding. Projects developed with general contractors who are Related Parties to the developer must be audited to the subcontractor level;
(B) include a CTCAC provided Sources and Uses form reflecting actual total costs incurred up to the funding of the permanent loan;
(C) certify that the CPA has not performed any services, as defined by AICPA and SEC rules, that would impair independence; and
(D) certify permanent financing conversion date
(3) an itemized breakdown of placed-in-service dates, shown separately for each building, on a Committee-provided form. If the placed-in service date(s) denoted are different from the date(s) on the certificate(s) of occupancy, a detailed explanation is required;
(4) photographs of the completed building(s);
(5) a request for issuance of IRS Form(s) 8609 and/or FTB Form(s) 3521A;
(6) a certification from the investor or syndicator of equity raised and syndication costs in a Committee-provided format;
(7) an updated application form;
(8) an owner-signed certification documenting the services currently being provided to the residents, including identifying service provider(s), describing services provided, stating services dollar value, and stating services funding source(s) (cash or in-kind), with attached copies of contracts and MOUs for services;
(9) a copy of the project owner limited partnership agreement;
(10) a list of all amenities provided at the project site including any housing type requirements of Section 10325(h) committed to in the Tax Credit application, and color photographs of the amenities. If the list differs from that submitted at application, an explanation must be provided; housing type requirements must be completed. In addition, the project owner must provide a list of any project amenities not included in basis for which the property owner intends to charge an optional fee to residents;
(11) a description of any charges that may be paid by tenants in addition to rent, with an explanation of how such charges affect eligible basis;
(12) if applicable, a certification from a third-party tax professional stating the percentage of aggregate basis (including land) financed by tax exempt bonds for projects that received Tax Credits under the provisions of Section 10326 of these regulations;
(13) all documentation required pursuant to the Compliance and Verification requirements of Sections 10325(f)(7) and 10326(g)(6);
(14) all documentation required pursuant to the Compliance and Verification requirements of Sections 10327(c)(5)(B);
(15) if seeking a reduction in the operating expenses used in the Committee's final underwriting pursuant to Section 10327(g)(1) of these regulations, the final operating expenses used by the lender and equity investor;
(16) a certification from the project architect or, in the case of rehabilitation projects, from an architect retained for the purpose of this certification, that the physical buildings are in compliance with all applicable fair housing laws;
(17) all documentation required pursuant to the Compliance and Verification requirements of Section 10325(c)(5), if applicable;
(18) evidence that the project is in compliance with any points received under Section 10325(c)(8);
(19) a current utility allowance estimate as required by 26 CFR Section 1.42-10(c) and Section 10322(h)(21) of these regulations. Measures that are used in the CUAC that require field verification shall be verified by a certified HERS rater, in accordance with current HERS regulations; and
(20) for tribal trust land, the lease agreement between the Tribe and the project owner.
(21) Evidence that the subject property is within the control of the project owner in the form of an executed lease agreement, a current title report within 90 days of application except as provided in section 10322(h)(35) (or preliminary title report, but not title insurance or commitment to insure) showing the project owner holds fee title, a grant deed, or, for tribal trust land, a title status report or an attorney's opinion regarding chain of title and current title status.
(22) Evidence that the project is in compliance with the provisions of the CDLAC resolution, if applicable.
(23) If the application includes a legal separation or subdivision of a building that is not a condominium plan:
(A) a legal opinion of how the legal separation meets the IRS definition of a building. The opinion must include a summary of the common area and building access ownership structure and any shared use agreements; and
(B) if the project owners are proposing any kind of proportionate cost where there is a single common area owner, a tax attorney must provide an opinion on how proportioning a cost and corresponding eligible basis to an entity that does not own the space is permissible under IRS LIHTC and/or tax law. The opinion must include an estimated cost breakdown and the methodology for how these shared area costs were proportioned and is subject to review and approved by CTCAC.
(24) For multiphase projects proposing to share use of common areas and community space, a joint use agreement must be provided in the placed in service application. In addition, if there is any kind of proportionate cost for common area and community space to a project that does not own the area/space, a tax attorney must provide an opinion of how apportioning a cost and corresponding eligible basis to an entity that does not own the area/space is permissible under IRS LIHTC and/or tax law. The opinion must include an estimated cost breakdown and the methodology for how these shared area costs were apportioned and is subject to review and approval by CTCAC.
The Executive Director may waive any of the above submission requirements if not applicable to the project.
(j) Revisions to 4% Reservations at Placed in Service. Proposals submitted under Section 10326 of these regulations do not require new applications for changes in costs or Tax Credits alone. Committee staff will adjust the Credit amount when the placed-in-service package is received and reviewed. Approval of the Executive Director is required for any change in unit mix or income targeting after reservation except for changes that result in deeper income targeting. It is the applicant's responsibility to notify CTCAC of any unit mix or income targeting change. Projects at placed-in-service that are requesting additional Tax Credits will be required to submit a fee equal to one percent (1%) of the increase from reservation in the annual federal tax credits allocated. This section shall apply to all projects for which CTCAC issues tax forms after December 31, 2017.
(k) Unless the proposed project is a Special Needs development, or within ten (10) years of an expiring tax credit regulatory agreement, applicants for nine percent (9%) Low Income Housing Tax Credits to acquire and/or rehabilitate existing tax credit properties still regulated by an extended use agreement shall:
(1) certify that the property sales price is no more than the current debt balance secured by the property, and
(2) be prohibited from receiving any tax credits derived from acquisition basis.
All applicants for Low-Income Housing Tax Credits to acquire and/or rehabilitate existing tax credit properties still regulated by an extended use agreement shall use all funds in the applicant project's replacement reserve accounts for rehabilitating the property to the benefit of its residents, except that an applicant may use existing reserves to reasonably meet CTAC's or another funder's minimum reserve account requirement.

Credits

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.
History
1. New section filed 8-19-97; operative 2-18-97 pursuant to Health and Safety Code section 50199.17 (Register 97, No. 34).
2. Editorial correction of subsection (i)(4) (Register 98, No. 30).
3. Amendment of subsections (i)(1)(l), (i)(2)(D), (i)(6), (i)(20) and (j)(1)(G), repealer of subsection (j)(1)(H), subsection relettering, amendment of subsections (j)(4)(A), (j)(8)(A), (j)(8)(D)-(E), new subsection (j)(8)(F) and amendment of subsection (k) 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).
4. Amendment filed 7-26-99; operative 6-3-99 pursuant to Health and Safety Code section 50199.17 (Register 99, No. 31).
5. 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).
6. 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).
7. 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).
8. 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).
9. 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.
10. 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).
11. 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.
12. 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).
13. 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).
14. 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).
15. 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).
16. 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).
17. 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).
18. 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).
19. Amendment of subsection (h)(5) filed 12-14-2010; operative 10-27-2010 pursuant to Health and Safety Code section 50199.17 (Register 2010, No. 51).
20. Amendment of subsections (e), (h)(9), (h)(16), (h)(19) and (i)(1), repealer of subsections (i)(1)(A)-(i)(1)(A)(ii), subsection relettering, amendment of newly designated subsection (i)(1)(I) and subsections (i)(2)(L)-(M), new subsection (i)(2)(N), subsection relettering and amendment of newly designated subsection (i)(2)(Q) and subsections (i)(3)(B) and (i)(9) 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).
21. Amendment of subsections (h)(9), (h)(11), (h)(18), (i)(2)(B)-(i)(2)(B)(1), (i)(2)(J) 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).
22. New subsections (h)(9)-(h)(9)(B), subsection renumbering and amendment of newly designated subsection (h)(12) and subsections (i)(2)(B), (i)(2)(R), (i)(4)(A)-(B) and (k) 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).
23. Amendment of subsection (i)(2)(B) and new subsection (i)(2)(B)(3) filed 7-22-2013; operative upon adoption by the Tax Credit Allocation Committee on 5-15-2013 pursuant to Health and Safety Code section 50199.17. Submitted to OAL for printing only (Register 2013, No. 30).
24. 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).
25. Editorial correction renumbering second subsection designated (h)(21) to (h)(22) (Register 2015, No. 19).
26. Amendment of subsections (h)(9)(A)(vi) and (h)(21) 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).
27. Amendment of subsections (h)(9)(A)(vi), (h)(10) and (h)(21), new subsection (i)(20) and amendment of subsection (k)(2) 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).
28. Amendment of subsections (e)-(f), (h)(9), (h)(9)(A)(vi)-(h)(10), (h)(25)(B), (h)(26)(B), (i), (i)(6)-(10) and (i)(16), new subsection (i)(18), subsection renumbering, amendment of newly designated subsection (i)(21) and new subsection (i)(22) 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).
29. Amendment of subsections (e), (f), (h)(5), (h)(9), (h)(10), (h)(21) and (h)(23), new subsections (h)(34)-(35) and amendment of subsections (i)(17)-(18) and (j) 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).
30. Amendment of subsections (e)-(f), (h)(9), (h)(9)(A)(i), (h)(9)(A)(iv) and (h)(10), repealer of subsection (h)(30)(B), subsection relettering, amendment of subsection (h)(32), repealer of subsection (h)(33), subsection renumbering and amendment of subsections (i)(2)(A) and (k) 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).
31. Amendment of subsections (d)-(e), (h)(1), (h)(9)(A), (h)(9)(B), (h)(16) and (h)(22) 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).
32. Amendment of subsections (h)(27)-(28) filed 5-4-2020; operative upon adoption by the California Tax Credit Allocation Committee on 4-3-2020 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 2020, No. 19).
33. Amendment of subsections (h)(3), (h)(9) and (h)(9)(A)-(B), new subsection (h)(9)(C), amendment of subsections (h)(10), (h)(17) and (h)(26)(B), new subsection (h)(35), amendment of subsections (i)(2), (i)(2)(C) and (i)(21), new subsections (i)(23)-(i)(24), amendment of subsection (j) 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).
34. Amendment of subsections (h)(12) and (h)(22) 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).
35. Amendment of subsections (d)-(e), (h)(1), (h)(9)-(h)(9)(v), (h)(9)(A), (h)(9)(B)(i), (h)(10), (h)(25)(A)-(B), (h)(26)(A)-(B), (h)(30)(D)-(E), (h)(33)-(34), (i)(2)(C), (i)(12), (j) and (k)(2) 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).
36. Amendment of subsections (h)(21), (h)(31), (i), (i)(2)(B) and (i)(2)(C) and new subsection (i)(2)(D) 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).
37. Amendment of subsections (h)(32) and (i) 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).
This database is current through 7/5/24 Register 2024, No. 27.
Cal. Admin. Code tit. 4, § 10322, 4 CA ADC § 10322
End of Document