The California Tax Credit Allocation Committee’s (TCAC) 2018 Threshold Basis Limits and 2018 Operating Expense Minimums for 2018 Applications are now available.
In 2008, TCAC implemented a threshold basis limit system utilizing county and regional cost data. This data, obtained from the California Tax Credit Allocation Committee’s (TCAC’s) database, consists of new construction projects that have been awarded tax credits. TCAC is now releasing 2018 threshold basis limits based on an updated data set, and the following summarizes steps taken to update this data. The dataset uses a ten-year period of historical cost data. In calculating the new limits, TCAC adds newly-awarded projects to the data set and deletes the oldest year of project data (typically eleven year-old data). The current data set consists of a ten-year period from 2008-2017. For most regions data consists of a shorter time span (the most recent 5-8 years) due to a statistically significant project volume in that region. Staff has applied the R.S. Means Historical Cost Index and City Cost Indexes to the data as construction cost inflators, as has been done since generating the original 2008 limits. These indexes have been updated to use the current industry cost adjusters. This methodology replicates the original 2008 basis limit methodology. As indicated above, TCAC staff has added data for projects receiving 2017 tax credit reservations (both 9% and 4%). Staff uses application estimates for a given project until TCAC receives a final certified project cost report. Beginning this year, competitive projects’ costs have been updated with interim cost estimates from the 180/194-day application submissions. The data set was also updated with all final project cost certifications received during 2017. Additionally, consistent with 2017 practice, no county’s basis limits are less than the basis limit floor set by the rural region. For counties that would have had a reduction to basis limits based on updated data, the limits of the previous year are used. As it has done historically, TCAC staff again adjusted costs by one-half (0.5) standard deviation for 9% projects and one (1.0) standard deviation for 4% projects.
