Cal. Code Regs. Tit. 4, § 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 except as provided
in Section 10322(e).
Applications not meeting all application information and submission
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. Disqualified applicants shall be
notified in writing by the Committee of the basis for disqualification and may
appeal the disqualification under Section
10330.
(e) Application Omissions. 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 their 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. Any submission of additional documents, including as part of an
appeal for an application disqualified under Section
10322(d), shall
include evidence demonstrating either the document existed as of the
application-filing deadline, or the document certifies to a condition existing
at the time of the application-filing deadline. It is within the Executive
Director's discretion to request any clarifying information or material
regarding the additional document(s).
(f) Application changes. Notwithstanding
Section 10322(e), no
application changes are permitted except as allowed under Sections
10317(d),
10325(c)(6)(B),
and 10327(a). Any
changes made 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 comply with local, state, and
federal laws, constitutions, codes, standards, rules, guidelines, and
regulations, including, without limitation, those that pertain to
accessibility, construction, health and safety, labor, fair housing, fair
employment practices, affirmatively furthering fair housing, nondiscrimination,
and equal opportunity, including the Fair Housing and Non-Discrimination Laws
and Housing and Accessibility Requirements;
(G) disclose any regulatory or investigative
proceeding by a local, state, or federal agency relating to an alleged,
pending, ongoing, or closed violation of fair housing or anti-discrimination
laws and the status of the proceeding, as applicable;
(H) acknowledge that the Committee has
recommended the applicant seek tax advice;
(I) acknowledge that the application will be
evaluated according to Committee regulations, and that Credit is not an
entitlement;
(J) acknowledge that
continued compliance with program requirements is the responsibility of the
applicant;
(K) acknowledge that
information submitted to the Committee is subject to the Public Records
Act;
(L) agree to enter with the
Committee into a regulatory contract if Credit is allocated; and,
(M) 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) Supportive Services coordinator, if
applicable;
(G) property management
company;
(H) consultant;
(I) market analyst and/or appraiser;
and
(J) 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 their 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.
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 design of the development will comply with
building codes and the physical building requirements of all applicable Housing
and Accessibility Requirements. In the case of rehabilitation projects
proceeding without an architect, the entity performing the CNA 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 consistent with the requirements of Section
10325(f)(7)(A), and
(iii) existing tax credit projects with new
photovoltaics installed, 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). 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 CTCAC approval.
(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 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 CNA 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 Laws.
(35) Reapplication documents. Notwithstanding
the time sensitive document requirements, the Committee may permit the site
control title report and the CNA 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 (14) 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 Supportive 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 applicable
documentation required pursuant to the Compliance and Verification requirements
of Sections
10325(c)(5),
10325(f)(7),
10326(g)(6) and
10327(c)(5)(B);
(14) 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;
(15) 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 design of
the development is in compliance with all applicable Housing and Accessibility
Requirements;
(16) evidence that
the project is in compliance with any points received under Section
10325(c)(8);
(17) 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
(18)
for tribal trust land, the lease agreement between the Tribe and the project
owner.
(19) 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.
(20)
evidence that the project is in compliance with the provisions of the CDLAC
resolution, if applicable.
(21) 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.
(22) 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 CTCAC's or another funder's minimum reserve account requirement.
Notes
Note: Authority cited: Section 50199.17, Health and Safety Code. Reference: Sections 12206, 17058 and 23610.5, Revenue and Taxation Code; and Sections 50199.4, 50199.5, 50199.6, 50199.7, 50199.8, 50199.9, 50199.10, 50199.11, 50199.12, 50199.13, 50199.14, 50199.15, 50199.16, 50199.17, 50199.18, 50199.20, 50199.21 and 50199.22, Health and Safety Code.
Note: Authority cited: Section 50199.17, Health and Safety Code. Reference: Sections 12206, 17058 and 23610.5, Revenue and Taxation Code; and Sections 50199.4, 50199.5, 50199.6, 50199.7, 50199.8, 50199.9, 50199.10, 50199.11, 50199.12, 50199.13, 50199.14, 50199.15, 50199.16, 50199.17, 50199.18, 50199.20, 50199.21 and 50199.22, Health and Safety Code.
2. 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
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
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
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
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
32. Amendment of subsections (h)(27)-(28) filed
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
37. Amendment of subsections (h)(32) and (i) filed 5-20-2024; operative upon adoption by the California Tax Credit Allocation Committee on
38. Amendment of subsections (d)-(f), (h)(1)(F), (h)(9)(B), (h)(10), (h)(12), (h)(21), (h)(26)(B), (h)(35), (i), (i)(8), (i)(13) and (k)(2), new subsections (h)(1)(G) and (h)(5)(F), subsection relettering, repealer of subsections (i)(14) and (i)(17), subsection renumbering and amendment of newly designated subsections (i)(15), (i)(19)-(21) filed 2-3-2025; operative upon adoption by the California Tax Credit Allocation Committee on
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