The California Tax Credit Allocation Committee (TCAC) yesterday (April 16) issued a memo in response to public comments received on its proposed regulation changes related to the American Recovery and Reinvestment Act (ARRA). TCAC has considered all the comments and has finalized its recommendations to the Committee for adoption on April 30, 2009. Revised regulation changes include:
- Clarify that updated market information or a sponsor’s assets, liabilities, or pending litigation may be cause for denying a loan application.
- Establish special needs and SRO projects as eligible for cash in lieu of credit awards of up to 85 cents per tax credit dollar, while all other cash in lieu awards would not exceed 80 cents. TCAC would also provide up to 55 cents per State tax credit dollar for cash in lieu of credit awards. Changes also now permit applications for a partial exchange of credits for cash. New text clarifies a standard for good faith efforts to obtain an equity investment.
- Establish a gap financing maximum of 12 cents per federal tax credit dollar up to 80 cents per tax credit dollar, and 9 cents per State tax credit dollar.
- Eliminate proposed assistance to offset falling credit rates.
- Establish a methodology for accounting for additional federal prevailing wage costs.
- Adjust per award maximum upward to $20 million for 2009 credit recipients, and $25 million for special needs projects.
- Establish a competitive scheme for 9 percent projects to receive either gap financing or cash in lieu of credit awards. Special needs or SRO projects seeking cash in lieu of credits could forgo the competition and receive awards.
- Permit the Executive Director to extend placed in service deadlines for cash in lieu of credit recipients.
- Provide timing forbearance for 2009 9 percent tax credit applicants related to public funding commitments and other readiness criteria.
- Establish a flat 12 cent per tax credit dollar gap financing assumption within 2009 9 percent applications. Also permit a 9 cent per State credit dollar assumption within such applications. These gap amounts would be in addition to the equity pricing assumptions within the application.
- Except special needs and SRO projects from the cash in lieu of credits competition among 2009 9 percent applicants.
- Expand the scoring of rental assistance beyond Section 8.
- Broaden eligible 2009 4 percent early applicants to MHP- and MHSA-funded projects with pending tax credit applications.
- Add a paragraph raising the debt service coverage ratio requirement for cash awards.
- State the order of recordation policy for TCAC Deeds of Trust.
- Adjust the pay-in schedule for cash in lieu of credit awards, and modify final payment terms.
- Add to the final tiebreaker a provision counting public land leases as public funding.
