(a) General. Each February the Committee shall provide the FTB with a listing of project owners reserved and or allocated credit during the preceding calendar year. The Committee, as the agency charged with enforcing the program regulations and statutes, shall report any violations of program regulations to the FTB.
(b) Purpose. These regulations implement the Farmworker Housing Assistance Program which shall provide assistance for the housing of farmworkers and their families. Preference shall be given family projects. Housing types may consist of single-family residences, multi-family residences, manufactured housing, mobile homes or dormitory style dwellings. The program shall allow dormitory style housing to be restricted by sex. Farmworkers need not be employees of the property owner upon which the farmworker housing project is located.
(c) Tax credit. The Committee shall allocate Credit calculated on the project's Eligible Costs. Applicants for the Farmworker Housing Assistance Program may be project owners or a bank or financial institution.
(1) Credit shall not be allowed unless:
(A) The project is constructed or rehabilitated under covenants, conditions and restrictions imposed by this program and pursuant to the Farmworker Housing Assistance Program;
(B) The owner operates or ensures the operation of the farmworker housing pursuant to the requirements of the program for the term of the compliance period;
(C) The owner obtains a cost audit and certification of Eligible Costs from a qualified accountant;
(D) The owner enters into a regulatory agreement with TCAC which will be recorded against the land;
(E) The taxpayer obtains a TCAC 3521B (7/97) from the Committee indicating the amount of credit for which the project qualifies.
(2) For owners of farmworker housing, the credit allocated shall be an amount equal to the lesser of fifty percent (50%) of the Eligible Costs as defined in Section 11001 or the amount allocated to the taxpayer for the income year.
(A) No credit can be claimed until the qualified year as defined in Section 11001.
(B) Should the credit exceed the taxpayer's tax liability, the excess may be carried over to reduce the tax liability in the following years until the credit is exhausted.
(C) No costs paid or incurred prior to January 1, 1997 are allowable.
(D) Any costs paid or incurred prior to application are not allowable.
(3) For banks and financial institutions, the credit allocated shall be an amount equal to fifty percent (50%) of the difference between the amount of interest income which could have been collected had the loan rate been one point above prime, or any other index used by the lender, and the lesser amount of interest income actually due for the term of the loan by the bank or financial corporation. Credit will be calculated only on those portion(s) of loans funding Eligible Costs.
(d) Reservation. The Committee shall allocate Credit annually through one or more funding cycles dependent upon the availability of credit after the award of credit each cycle. The filing deadlines for the funding cycles shall be 5:00 p.m. of the last business day of March, June, September and October. Applications not received by the filing deadline for a funding cycle will not be considered until the following cycle.
(e) Waiting list. Waiting list Credit. Credit returned during any calendar year, and not made available in a reservation cycle, shall be made available to the highest ranking applications on Committee waiting lists.
(f) Subsequent year's ceiling. The Committee in its discretion may make reservations of Credit against a subsequent year's federal and state credit ceilings.
(g) Credit amounts available. The amount of Credit shall be established according to the following provisions:
(1) Amount of Credit. The amount available shall be equal to the sum of:
(A) $500,000.00 plus the unused Credit balance from the preceding calendar year as of the date of the application deadline;
(B) Returned Credit. Credit returned and not allocated during any calendar year shall be made available for funding applications in the subsequent year.
(h) Credit and ownership transfers. Banks or financial institutions shall not transfer or assign loans for which credit was awarded nor shall an owner of a project receiving credit transfer or assign the project without prior written approval of the Committee.
(1) Any proposed transaction shall be evidenced by a written agreement between the parties and shall include agreements entered into by the entity and the Committee.
(2) The entity proposing to acquire the ownership of a project shall be subject to a “qualifications review” by the Committee to determine if sufficient project development, financial capability and management expertise exists for owning or operating or ensuring the operation and maintenance of a Credit project. Information regarding the names of the purchaser(s) or transferee(s), and detailed information describing the financial capacity of said persons, shall be provided to the Committee upon request.
(3) Banks or financial institutions which are recipients of Credit shall notify TCAC of any sale or assignment of a loan generating said credit. The notification shall indicate whether the bank or financial institution originating the loan will retain the servicing of the loan. The notification shall include the name, address, and contact person of the bank or financial institution purchasing the loan.
(A) The original lender may continue to claim credit if the servicing responsibilities are retained upon sale or transfer of the loan.
(i) Separate Application. A separate application is required for each project in an application cycle.
(j) Application forms. Applicants shall submit the application form FHAP-1 1998 approved by the Committee and incorporated by reference in full.
(1) A bank or financial institution requesting Credit for a below market interest rate loan made to a qualified project shall complete those portions of the application indicated and provide supplemental information as requested by the Committee.
(k) Late applications. Applications received after the application filing deadline shall not be accepted.
(l) Incomplete application. Applications not meeting all program and threshold requirements shall be considered incomplete and shall be disqualified from the cycle in which the application was submitted. Incomplete applications shall be retained by the Committee and the applicant shall be notified by the Committee of the disqualification.
(m) Complete application. An application shall be deemed complete when the Committee determines that the application meets all program and threshold requirements. The applicant is responsible for providing evidentiary material that demonstrates, to the Committee's satisfaction, conformance with all program and threshold requirements.
(n) Application changes. An application or any portion of an application may not be changed following the application filing deadline.
(o) Substantially complete application. Notwithstanding the previous paragraphs, applicants submitting substantially complete applications with missing documents shall be given five (5) business days from the date of receipt of Committee notification to submit the requested documents to complete the application. If the required documents are not submitted within the time provided, the application shall be considered incomplete. The applicant shall demonstrate and confirm that evidentiary documents missing from the application were executed on, or prior to, the application filing deadline.
(p) Disqualifying event. Should the committee determine that the applicant was awarded credit based on fraud or misrepresentation, or if the taxpayer fails to comply with the requirements of the Employee Housing Act, if applicable, the Farmworker Housing Assistance Program, or any other requirement imposed under this section the Committee will take one or more of the following actions:
(1) Declare an application invalid and the applicant shall forfeit all fees paid; or, if a Credit has been reserved or allocated, recapture or rescind the Credit;
(2) Notify the FTB of the disqualifying event and retain all fees paid to the Committee.
(3) In accordance with Sections 17053.14 (k), 23608.2 (k), 23608.3 (g) of the Revenue and Taxation Code, the applicant shall be subject to the fines and penalties imposed by these sections.
(q) Noncompliance. The applicant has an affirmative duty to provide true and correct information to the Committee at all times. Upon being informed, or finding, that the project, or taxpayer, or any person acting on behalf of a taxpayer or on behalf of a project, has failed to comply with the Farmworker Housing Assistance Program, or any other requirement imposed by the Committee in these regulations, the Committee may, based upon the findings, declare that a “disqualifying event” has occurred and shall notify the FTB.
(r) Damage or Destruction. In the event that the farmworker housing project is damaged or destroyed by a casualty not caused by the owner, the compliance period has not expired and the owner commences reasonable action to repair or replace the farmworker housing, the taxpayer may continue to claim the credit as if no damage or destruction had taken place.
(1) The taxpayer shall notify the Committee of such an event within fifteen (15) calendar days subsequent to the occurrence.
(2) The taxpayer shall provide documentation demonstrating the commencement of reasonable action to repair or replace the farmworker housing.
(3) Based upon the evidence provided, the Committee shall determine if the taxpayer remains in compliance with the program regulations. If the Committee determines that the taxpayer has not remained in compliance, the Committee may determine that a “disqualifying event” has occurred and take such actions as described in Sections 17053.14 (k), 23608.2 (k) and 23608.3 (g) of the Revenue and Taxation Code.
(s) Project no longer feasible or no further need. If the farmworker housing project is determined by the Committee to be no longer economically feasible or that there is no further need for the housing, the Committee may invoke Section 50199.54 of the Health and Safety Code and recapture the Credit previously allocated.
(t) Standard application documents.
(1) Applicant Certification Statement. A signed, notarized statement acknowledging and certifying, under penalty of perjury, that all information provided the Committee is true and correct and that the applicant affirms the duty to notify the Committee of any changes causing information to become false or misleading. The applicant statement shall certify that the applicant:
(A) is familiar with and will comply with the Credit program, statutes and regulations;
(B) holds the Committee and its employees harmless from program-related matters;
(C) acknowledges the potential for program modifications resulting from statutory or regulatory actions;
(D) acknowledges that Credit amounts reserved or allocated may be reduced should the terms and amounts of project sources and uses of funds be modified;
(E) agrees to comply with applicable laws outlawing discrimination;
(F) acknowledges that the Committee has recommended the applicant seek tax advice;
(G) acknowledges that the application will be evaluated according to program regulations, and that Credit is not an entitlement;
(H) acknowledges that continued compliance with program requirements is the responsibility of the applicant or a Committee approved transferee and that failure to comply with program requirements at any time may result in the Committee's declaration of a disqualifying event;
(I) acknowledges that information submitted to the Committee is subject to the Public Records Act;
(J) agrees to enter into a regulatory agreement with the Committee if Credit is allocated;
(K) acknowledges that upon the declaration of a natural disaster or critical occurrence, at any time during the compliance period, and at the discretion of the owner, the housing may be utilized for households needing shelter for up to 60 days if there are no farmworkers who have submitted an application to reside, or to continue to reside, in the housing.
(2) The Application form. All applicants shall provide the following:
(A) General Applicant Information
(1) Business name and status, including contact person, address, FAX and phone numbers and taxpayer identification number.
(2) Applicant's present and future role in ownership during the compliance period.
(3) Credit amount requested.
(B) Proposed Project Information
(1) Subject Property Information
(a) A preliminary title report of the subject property.
(b) Site and surrounding area description. A narrative description of the proposed use of the subject property, all adjacent property land uses, and any environmental or toxic concerns. Labeled photographs or color copies of the subject property and all adjacent properties shall be provided.
(c) Unique site features. A description of any unique features of the subject property which could result in increased project costs, toxic or environmental mitigation.
(d) Construction and design description. A detailed description of the proposed construction and design.
(e) Architectural drawings. If applicable, preliminary drawings of the proposed project including a site plan, building elevations, and unit floor plans which include unit and total square footage.
(f) If rehabilitation, a current (dated not more than 6 months prior to the application deadline) appraisal and a copy of the purchase contract.
(g) If rehabilitation, a tenant relocation plan, if applicable.
(h) Placed-in-service schedule. An estimated time schedule for the placed-in-service date(s) for each building and the total project.
(2) Land Use Approvals
(a) Evidence that all local approvals necessary to construct or rehabilitate the project have been obtained
(C) Financing plan. A detailed description that includes construction loan, permanent loan, bridge loan sources, and other fund sources, rental income, operating subsidies and reserves. The commitment status of all sources shall be provided along with supporting documentation from the lenders. All non-traditional financing arrangements shall be fully explained and accompanied with supporting documentation. Additionally, the following information is required:
(1) Lender's names, addresses, FAX and phone numbers, and contact person.
(2) Loan amount (rate, term, payments and anticipated usage) and commitment status.
(3) Sources and Uses of Funds. Itemize by line item the use of funds.
(4) Cash flow projection. A cash flow projection for the entire 30 year compliance period in which income projections increase at 2.5% per year, expense projections increase at 3.5% per year and property taxes increase at 1.0% per year.
(D) Threshold Compliance Summary. Completion of the relevant checklist itemizing the documentation provided by the applicant in the application.
(E) Identities of interest. Identification of any persons or entities (including affiliated entities) that plan to provide development, operational services, or financial support to the proposed project.
(F) Organizational documents. All existing or proposed organizational documents of the applicant, including a detailed description of the ownership role of the applicant throughout the compliance period.
(G) Use of Credit. A detailed explanation of how the Credit will be used by the applicant.
(H) Cost Certification. For new construction or rehabilitation, the applicant shall provide, from a qualified accountant, a construction cost audit and a certification of Eligible Costs.
(I) Terms of syndication. If the Credit is to be syndicated, the applicant shall meet the following requirements:
(1) A written estimate from the syndicator of the amount of equity dollars expected to be raised based upon the amount of Credit requested including pay-in schedules, syndication costs, all syndicator and consulting fees and an estimated tax credit factor shall be included in the application.
(2) No syndication costs shall be included as part of the Total Project Cost.
Credits
Note: Authority cited: Section 50199.56, Health and Safety Code. Reference: Sections 50199.52(a)(2), 50199.52(c), 50199.53(c), 50199.54(a) and (b) and 50199.55(a), Health and Safety Code; and Sections 17053.14(a), (b), (d), (e), (f), (k) and (l), 23608.2(b), (e), (f), (k) and (l) and 23608.3(b), (c), (d), (e), (f) and (g), Revenue and Taxation Code.
History
1. New section filed 9-29-98; operative 9-29-98 pursuant to Government Code section 11343.4(d) (Register 98, No. 40).
2. Editorial correction to subsection designator (Register 2022, No. 18).
This database is current through 4/12/24 Register 2024, No. 15.
