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§ 10302. Definitions.

4 CA ADC § 10302Barclays Official California Code of RegulationsEffective: January 24, 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: January 24, 2024
4 CCR § 10302
§ 10302. Definitions.
(a) Adaptive reuse. Adaptive reuse means retrofitting and repurposing of existing buildings that create new residential rental units, and expressly excludes any project that involves rehabilitation of any construction affecting existing residential units. Adaptive reuse may include retrofitting and repurposing of existing hotels or motels if the hotel or motel is not currently a place of residence for the occupants, and/or sites that received a Project Homekey allocation.
(b) AHP. The Affordable Housing Program of the Federal Home Loan Bank.
(c) Allocation. The certification by the Committee of the amount of Federal, or Federal and State, Credits awarded to the applicant for purposes of income tax reporting to the IRS and/or the California Franchise Tax Board (“FTB”).
(d) Applicable Credit Percentage. The monthly rate, published in IRS revenue rulings pursuant to IRC Section 42(b)(1), applicable to the Federal Program for purposes of calculating annual Tax Credit amounts.
(e) Bath or bathroom. A bath or bathroom must be equipped with an exhaust fan, a toilet, a sink, a shower or bathtub, and a receptacle outlet.
(f) Bedroom. A bedroom must be at least 70 square feet, must include an interior door, a closet or free-standing wardrobe provided by the project owner, and at least one receptacle outlet.
(g) Capital Needs Assessment or CNA. The physical needs assessment report required for all rehabilitation projects, described in Section 10322(h)(26)(B).
(h) Chairperson. The Chairperson of the California Tax Credit Allocation Committee.
(i) Committee. The California Tax Credit Allocation Committee (“CTCAC”) or its successor.
(j) Community Foundation. A local foundation organized as a public charity under section 509(a)(1) of the Internal Revenue Code.
(k) Compliance Period. That period defined by IRC Section 42(i)(1) and modified by R & T Code Section 12206(h), and further modified by the provisions of these regulations.
(l) Credit(s). Housing Tax Credit(s), or Tax Credit(s).
(m) Credit Ceiling. The amount specified in IRC Section 42(h)(3)(C) for Federal Program purposes (including the unused credits from the preceding calendar year, the current year's population based credits, returned credits and national pool credits), and in R & T Code Section 17058(g) for State Program purposes.
(n) CTCAC. California Tax Credit Allocation Committee.
(o) Developer Fee. All Funds paid at any time as compensation for developing the proposed project, to include all processing agent fees, developer overhead and profit, construction management oversight fees if provided by the developer, personal guarantee fees, syndicator consulting fees, and reserves in excess of those customarily required by multi-family housing lenders.
(p) Development Team. The group of professionals identified by the applicant to carry out the development of a Tax Credit project, as identified in the application pursuant to subsection 10322(h)(5).
(q) Eligible Project. A proposed 9% Tax Credit project that has met all of the Basic Threshold Requirements and Additional Threshold Requirements described in Sections 10325(f) and (g) below.
(r) Executive Director. The executive director of the California Tax Credit Allocation Committee.
(s) Farmworker Housing. A development of permanent housing for agricultural workers (as defined by California Labor Code Section 1140.4(b)) in which at least 50 percent of the units are available to, and occupied by, farmworkers and their households. The Committee may permit an owner to temporarily house non farmworkers in vacant units in the event of a disaster or other critical occurrence. However, such emergency shelter shall only be permitted if there are no pending qualified farmworker household applications for residency.
(t) Federally Subsidized. As defined by IRC Section 42(i)(2).
(u) Federal Credit. The Tax Credit for low-income rental housing provided under IRC Section 42 and implemented in California by the Committee.
(v) Financial Feasibility. As required by IRC Section 42(m)(2) and further defined by these regulations in Section 10327.
(w) FTB. State of California Franchise Tax Board.
(x) Hard construction costs. The amount of the construction contract, excluding contractor profit, general requirements and contractor overhead.
(y) High-Rise Project(s). A project which applies for a Credit reservation pursuant to Section 10325 in which 100 percent (100%) of the residential units are Tax Credit Units and for which the project architect has certified concurrently with the submission of an application to the Committee that (1) one or more of the buildings in the project would have at least six stories; and (2) the construction period for the project is reasonably expected to be in excess of 18 months.
(z) Homeless. As defined by Section 10315(b)(1) through (4).
(aa) Hybrid project or development. A new construction development constructed with separate 9% and 4% Federal Credit Allocations. The development must meet the conditions set forth in Section 10325(c)(9)(A).
(bb) IRS. United States Internal Revenue Service.
(cc) Local Development Impact Fees. The amount of impact fees, mitigation fees, or capital facilities fees imposed by municipalities, county agencies, or other jurisdictions such as public utility districts, school districts, water agencies, resource conservation districts, etc.
(dd) Local Reviewing Agency. An agency designated by the local government having jurisdiction that will perform evaluations of proposed projects in its locale according to criteria set forth by the Committee.
(ee) Low-Income Unit. As defined by IRC Section 42(i)(3).
(ff) Market-Rate Unit. A unit other than a Tax Credit Unit as defined by these regulations.
(gg) MHP. Multifamily Housing Program of California's Department of Housing and Community Development.
(hh) “Net Project Equity” shall mean the total sale or refinancing proceeds resulting from a Transfer Event less the payment of all obligations and liabilities of the owner, including any secured and unsecured related and third-party debt thereof (including, without limitation, repayment of deferred developer fees and repayment of any advances made by a partner to fund operating and/or development deficits).
(ii) Net Tax Credit Factor. The estimated or actual equity amount raised or to be raised from a tax credit syndication or other instrument, not including syndication related expenses, divided by the total amount of Federal and State Tax Credits reserved or allocated to a project. The calculation must include the full ten-year amount of Federal Tax Credits and the total amount of State Tax Credits.
(jj) QAP. The “Low Income Housing Tax Credit Program Qualified Allocation Plan,” as adopted in regulation Sections 10300 et. seq., and in accordance with the standards and procedures of IRC Section 42(m)(1)(B).
(kk) “Qualified Capital Needs Assessment” shall mean a capital needs assessment for a property subject to a Transfer Event dated within one hundred eighty (180) days of the proposed Transfer Event which (i) meets the requirements of (a) the Fannie Mae Multifamily Instructions for the PNA Property Evaluator, (b) Freddie Mac's Property Condition Report requirements in Chapter 14 of the Small Balance Loan Addendum, (c) HUD's Multifamily Capital Needs Assessment section in Appendix 5G of the Multifamily Accelerated Process Guide, or (d) Standard Guide for Property Condition Assessments: Baseline Property Condition Assessment Process (ASTM Designation E 2018-08) utilizing a recognized industry standard to establish useful life estimates for the replacement reserve analysis, and (ii) clearly sets forth (a) the capital needs of the project for the next three (3) years (the “Short-Term Work”) and the projected costs thereof, and (b) the capital needs of the project for the subsequent twelve (12) years (the “Long Term Work”) and the projected contributions to reserves that will be needed to accomplish that work.
(ll) Qualified Nonprofit Organization. An organization that meets the requirements of IRC Section 42(h)(5), whose exempt purposes include the development of low-income housing as described in IRC Section 42, and which, if a State Tax Credit is requested, also qualifies under H & S Code Section 50091.
(mm) RHS. United States Rural Housing Service, formerly Rural Housing and Community Development Service or RHCDS, formerly Farmers Home Administration or FmHA
(nn) Related Party.
(1) the brothers, sisters, spouse, ancestors, and direct descendants of a person;
(2) a person and corporation where that person owns more than 50% in value of the outstanding stock of that corporation;
(3) two or more corporations, general partnership(s), limited partnership(s) or limited liability corporations connected through debt or equity ownership, in which
(A) stock is held by the same persons or entities for
(i) at least 50% of the total combined voting power of all classes that can vote, or
(ii) at least 50% of the total value of shares of all classes of stock of each of the corporations or
(iii) at least 50% of the total value of shares of all classes of stock of at least one of the other corporations, excluding, in computing that voting power or value, stock owned directly by that other corporation;
(B) concurrent ownership by a parent or related entity, regardless of the percentage of ownership, or a separate entity from which income is derived;
(C) concurrent ownership by a parent or related entity, regardless of the percentage of ownership, or a separate entity where a sale-leaseback transaction provides the parent or related entity with income from the property leased or that creates an undue influence on the separate entity as a result of the sale-leaseback transaction;
(D) concurrent ownership by a parent or related entity, regardless of the percentage of ownership, of a separate entity where an interlocking directorate exists between the parent or related entity and the separate entity.
(4) a grantor and fiduciary of any trust;
(5) a fiduciary of one trust and a fiduciary of another trust, if the same person is a grantor of both trusts;
(6) a fiduciary of a trust and a beneficiary of that trust;
(7) a fiduciary of a trust and a corporation where more than 50% in value of the outstanding stock is owned by or for the trust or by or for a person who is a grantor of the trust;
(8) a person or organization and an organization that is tax-exempt under Subsection 501(c)(3) or (4) of the IRC and that is affiliated with or controlled by that person or the person's family members or by that organization;
(9) a corporation and a partnership or joint venture if the same persons own more than:
(A) 50% in value of the outstanding stock of the corporation; and
(B) 50% of the capital interest, or the profits' interest, in the partnership or joint venture;
(10) one S corporation or limited liability corporation and another S corporation or limited liability corporation if the same persons own more than 50% in value of the outstanding stock of each corporation;
(11) an S corporation or limited liability corporation and a C corporation, if the same persons own more than 50% in value of the outstanding stock of each corporation;
(12) a partnership and a person or organization owning more than 50% of the capital interest, or the profits' interest, in that partnership; or
(13) two partnerships where the same person or organization owns more than 50% of the capital interests or profits' interests.
The constructive ownership provisions of IRC Section 267 also apply to subsections 1 through 13 above. The more stringent of regulations shall apply as to the ownership provisions of this section.
(oo) Reservation. As provided for in H & S Code Section 50199.10(e) the initial award of Tax Credits to an Eligible project. Reservations may be conditional.
(pp) Resyndication: A project subject to an existing tax credit regulatory agreement that is awarded an allocation of tax credits to preserve and extend the affordability of the project.
(qq) Rural. An area defined in H & S Code Section 50199.21.
(rr) Scattered Site Project. A project in which the parcels of land are not contiguous except for the interposition of a road, street, stream or similar interposition.
(1) For acquisition and/or rehabilitation projects with one pre-existing project-based Section 8 contract in effect for all the sites, there shall be no limit on the number or proximity of sites.
(2) For acquisition and/or rehabilitation projects with any of the following: (A) existing federal or state rental assistance or operating subsidies, (B) an existing CTCAC Regulatory Agreement, or (C) an existing regulatory agreement with a federal, state, or local public entity, the number of sites shall be limited to five, unless the Executive Director approves a higher number, and all sites shall be either within the boundaries of the same city, within a 10-mile diameter circle in the same county, or within the same county if no location is within a city having a population of five-hundred thousand (500,000) or more.
(3) For new construction projects and all other acquisition and/or rehabilitation projects, the number of sites shall be limited to five, and all sites shall be within a 1 mile diameter circle within the same county.
(ss) Single Room Occupancy (SRO)/Studio: A unit that may or may not include a complete private bath and kitchen but generally does not have a separate bedroom. A complete private bath consists of a toilet and shower, with a vanity sink that may or may not be in the same room. SRO units in projects with an existing regulatory agreement recorded with CTCAC or another government agency shall be deemed having met the requirements of an SRO/Studio. Projects containing units that do not have complete private baths shall provide at least one bath per eight units and at least one complete bath per floor. Common kitchen facilities shall be provided for units without complete kitchens. CTCAC uses SRO and Studio interchangeably but recognizes some jurisdictions may not, and the project shall comply with all local regulations.
(tt) State Credit. The Tax Credit for low-income rental housing provided by the Revenue and Taxation Code Sections 12205, 12206, 17057.5, 17058, 23610.4 and 23610.5, including the State Farmworker Credit, formerly the Farmworker Housing Assistance Program provided by the Revenue and Taxation Code Sections 12206, 17058, and 23610.5 and by the Health and Safety Code Sections 50199.2 and 50199.7.
(uu) Tax Credit Units. Low-Income Units and manager units.
(vv) Tax-Exempt Bond Project. A project that meets the definition provided in IRC Section 42(h)(4).
(ww) Tax forms. Income tax forms for claiming Tax Credits: for Federal Tax Credits, IRS Form 8609; and, for State Tax Credits, FTB Form 3521A.
(xx) “Transfer Event” shall mean (i) a transfer of the ownership of a project, (ii) the sale or assignment of a partnership interest in a project owner and/or (iii) the refinancing of secured debt on a project. The following shall not be deemed a Transfer Event: (i) the transfer of the project or a partnership or membership interest in a project owner in which reserves remain with the project and the debt encumbering the project is not increased, refinanced or otherwise modified, (ii) the refinancing of project debt which does not increase the outstanding principal balance of the debt other than in the amount of the closing costs and fees paid to the project lender and third parties as transaction costs, provided that reserves remain with the project, (iii) the replacement of a general partner by a limited partner upon the occurrence of a default by a general partner in accordance with partnership agreement of the project owner, (iv) a transfer pursuant to a foreclosure or deed in lieu of foreclosure to a non-related party, (v) a “Subsequent Transfer” pursuant to Section 10320(b)(4)(B) hereof, (vi) a transfer of the ownership of a project subject to an existing tax credit regulatory agreement with a remaining term of five (5) or less years if the transfer is made in connection with a new reservation of 9% or 4% tax credits, or (vii) the sale of a project, or the sale or assignment of a partnership interest in a project owner, to an unrelated party for which the parties entered into a purchase agreement prior to October 9, 2015. Notwithstanding the foregoing, the term “Transfer Event” shall be applicable only to projects in which at least 50% of the units are Tax Credit Units.
(yy) Threshold Basis Limit. The aggregate limit on amounts of unadjusted eligible basis allowed by the Committee for purposes of calculating Tax Credit amounts. These limits are published by CTCAC on its website, by unit size and project location, and are based upon average development costs reported within CTCAC applications and certified development cost reports. CTCAC staff shall use new construction cost data from both 9 percent and 4 percent funded projects, and shall eliminate extreme outliers from the calculation of averages. Staff shall publicly disclose the standard deviation percentage used in establishing the limits, and shall provide a worksheet for applicant use. CTCAC staff shall establish the limits in a manner that seeks to avoid a precipitous reduction in the volume of 9 percent projects awarded credits from year to year.
(zz) Tribe. A federally recognized Indian tribe located in California, or an entity established by the tribe to undertake Indian housing projects, including projects funded with federal Low Income Housing Tax Credits.
(aaa) Tribal Trust Land. Real property located within the State of California that meets both the following criteria:
(1) is trust land for which the United States holds title to the tract or interest in trust for the benefit of one or more tribes or individual Indians, or is restricted Indian land for which one or more tribes or individual Indians holds fee title to the tract or interest but can alienate or encumber it only with the approval of the United States.
(2) the land may be leased for housing development and residential purposes under Federal law.
(bbb) Waiting List. A list of Eligible Projects approved by CTCAC following the last application cycle of any calendar year, pursuant to Section 10325(h) below.
(ccc) CTCAC/HCD Opportunity Area Map. A map or series of maps approved annually by the Committee as the CTCAC/HCD Opportunity Area Map.

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. Amendment of subsections (f), (t) and (u), new subsections (w)-(w)(xiii), subsection relettering, and amendment of newly designated subsections (aa) and (bb) 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. Repealer of subsection (c), new subsections (o) and (s), subsection relettering and amendment of newly designated subsection (gg) 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 adding new subsection (n) and subsequent section relettering (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 subsection (v) 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. Repealer and new subsection (v) 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 redesignating subsections (gg)(3)(A)1.-3. as subsections (gg)(3)(A)i.-iii. and amendment of subsection (nn) 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 of subsections (d), (dd) and (ii) new subsection (oo) and subsection relettering 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. New subsections (cc), (ff), (mm)-(mm)(3), (qq) and (tt)-(tt)(2) and subsection relettering 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).
23. Amendment of subsection (ff) 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).
24. Amendment of subsections (v) and (aa), repealer of subsection (jj), subsection relettering, new subsection (nn), amendment of subsection (qq) and new subsection (vv) 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).
25. New subsections (a), (e), (f) and (z), subsection relettering, amendment of newly designated subsections (o), (s), (v) and (pp) 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).
26. Amendment of subsection (s), new subsections (z), (pp) and (ss), subsection relettering and amendment of newly designated subsections (hh) and (ccc) 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).
27. Amendment of subsection (a) 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).
This database is current through 7/5/24 Register 2024, No. 27.
Cal. Admin. Code tit. 4, § 10302, 4 CA ADC § 10302
End of Document