BILL ANALYSIS
------------------------------------------------------------
|SENATE RULES COMMITTEE | SB 73|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 445-6614 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
THIRD READING
Bill No: SB 73
Author: Dunn (D), et al
Amended: 6/19/01
Vote: 21
SENATE HOUSING & COMM. DEV. COMMITTEE : 7-0, 4/2/01
AYES: Dunn, Monteith, Ackerman, Alarcon, Costa, Escutia,
Romero
SENATE APPROPRIATIONS COMMITTEE : 11-0, 6/25/01
AYES: Alpert, Battin, Bowen, Escutia, Johannessen,
Johnson, Karnette, McPherson, Perata, Poochigian, Speier
SUBJECT : Taxation: low-income housing
SOURCE : State Treasurer, Phil Angelides
California Rural Legal Assistance Foundation
Western Center on Law and Poverty
DIGEST : This bill increases the amount of low-income
housing credits that can be allocated from $50 million to
$70 million for the 2001 calendar year, and adjusts the
amount for inflation each year thereafter.
ANALYSIS : The federal Tax Reform Act of 1986 created the
Low-Income Housing Tax Credit Program to stimulate private
investment in the production and rehabilitation of
affordable rental housing. The federal tax credits were
initially capped for each state at $1.25 per capita per
year. As part of last year's omnibus budget bill, Congress
increased the cap on federal credits per state to $1.50 per
CONTINUED
SB 73
Page
2
resident for 2001 and $1.75 per capita for 2002. In
following years the cap will increase further by a
percentage equal to the rise in the federal Consumer Price
Index.
Because high housing costs make it particularly difficult
to produce affordable housing in California, the
Legislature created a state low income housing tax credit
program in 1987 to supplement federal tax credits. The
state tax credit is only available to projects that receive
federal tax credits and are intended to stretch the federal
credits over more projects. The state tax credits are
currently limited to $50 million per year.
The California Tax Credit Allocation Committee (TCAC)
administers both the state and federal low income housing
tax credit programs. Based on a competitive application
process, TCAC allocates the tax credits to housing
developers who effectively sell the credits to investors to
raise capital for the construction of affordable housing
units. Investors typically pay 80 cents for each dollar of
tax credit. The program is currently oversubscribed by a
ratio of at least three to one. Moreover, TCAC ran out of
state credits last year before credits could be awarded to
all geographic areas of the state as required by their
guidelines.
Since their inception, the tax credit programs have helped
finance more than 100,000 affordable rental housing units
and have leveraged $3 billion in additional private and
public funds.
This bill increases the cap on state low-income housing tax
credits from $50 million per year to $70 million per year
for calendar year 2001 and indexes the cap to the federal
Consumer Price Index in following years.
This bill requires the California Tax Credit Allocation
Committee to review and evaluate the geographic
apportionment methodology of the low-income housing tax
credit program and report to the Legislature by June 30,
2002.
Comments
SB 73
Page
3
California's population continues to grow at a rapid rate,
and housing construction has not kept up with demand. The
State Department of Housing and Community Development
estimates that California needs to build 220,000 new homes
per year through 2020 to meet new demand. In 2000, the
best year in a decade, only 149,000 new homes and
apartments were built. This year an estimated 154,000 new
dwellings will be built. In addition, at least two million
renter households in California pay more than the
recommended 30 percent of their incomes toward shelter.
The author's office believes that there is a clear need for
additional resources to support affordable housing
development and that the low-income housing tax credit
program has been an effective means to leverage additional
private investment in affordable rental housing.
The author's office also points out that, because the two
programs are complementary, the recent increase in the
federal tax credits actually exacerbates the shortage in
state tax credits. This bill ensures that the state
credits will keep pace with increases in the federal
credits over time.
The demand for state low-income housing tax credits
increased from $84 million in 1994 to $212 million in 2000.
As a result of the intense competition, only 86 of the 270
developers (32%) who applied for tax credits last year were
able to receive an allocation. Almost of all of the
applications are made on behalf of proposed projects that
are ready to proceed. Increasing funding for the state tax
credit program will have an immediate benefit in that more
of these development that are already in the pipeline will
be able to proceed to construction.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 6/25/01)
State Treasurer, Phil Angelides (co-source)
California Rural Legal Assistance Foundation (co-source)
Western Center on Law and Poverty (co-source)
AARP
SB 73
Page
4
Asian Law Alliance, San Jose
Barbara Sanders and Associates
BRIDGE Housing
Brown, Winfield & Canzoneri, Inc.
Burbank Housing Development Corporation, Santa Rosa
California Church Impact
California Coalition for Rural Housing
California Housing Consortium
California Labor Federation, AFL-CIO
California Network of Neighborhood Programs
California Reinvestment Committee
California State Association of Electrical Workers
California State Pipe Trades Council
Capital Vision Equities
Chico Housing Improvement Program
Children's Advocacy Institute
Children Now
Citizens Housing
City and County of San Francisco
City of Los Angeles
City of Merced
City of Sacramento
Civic Center Barrio Housing Corporation, Santa Ana
Coachella Valley Housing Coalition, Indio
Coalition for Economic Survival, Los Angeles
Community Resource Associates, Clayton
Congress of California Seniors
Council of Community Housing Organizations, San Francisco
Devine & Gong, Inc.
East Bay Asian Local Development
East Bay Asian Local Development Corporation, Oakland
Eden Housing, Hayward
Enterprise Foundation, Los Angeles
Forest City Development
Friends Committee on Legislation of California
General Assistance Advocacy Project, San Francisco
Goldrich & Kest Industries
Gray Panthers
Great Northern Corporation, Weed
Harbor Interfaith Shelter, San Pedro
Homeward Bound of Marin
Housing Authority of the County of Santa Clara
Housing California
Housing Council
SB 73
Page
5
Inglewood Neighborhood Housing Services
JERICHO
JRT and Associates, Sausalito
La Raza Centro Legal, Inc., San Francisco
League of California Cities
Los Angeles Community Design Center
Los Angeles Housing Law Project
Lutheran Office of Public Policy, California
Mid-Peninsula Housing Coalition, Redwood City
Nancy Lewis Associates, Inc.
Napa Valley Community Housing
Neighborhood House Association, San Diego
Nevada County Housing and Community Development, Nevada
City
New Urban West, Inc.
Northbay Ecumenical Homes
Orange County Community Housing Corporation, Santa Ana
Orange County Congregation Community Organizations
Pacific American Properties, Inc.
Pajaro Valley Housing Corporation, Watsonville
People's Self-Help Housing Corporation, San Luis Obispo
Preservation Properties, Santa Monica
Protection and Advocacy, Inc.
Related Companies of California
Renee Franken Associates, Sacramento
Rubicon Programs, Inc., Richmond
Rural Communities Housing Development Corporation, Ukiah
Sacramento Gray Panthers
Sacramento Mutual Housing Association
Sacramento Neighborhood Housing Services
San Diego Housing Federation
Shelter Partnership, Los Angeles
Sisters of Saint Joseph's of Carondelet, Los Angeles
Southern California Association of Non-Profit Housing
St. Peters Housing Committee, San Francisco
Suburban Salt
Shelter Partnership, Los Angeles
Tenderloin Housing Clinic
The Agora Group, Goleta
The California Apartment Association
The Fair Housing Council of San Diego
The PAM Companies
USA Properties Fund
Venice Community Housing
SB 73
Page
6
West Hollywood Community Housing Corporation
Western States Council of Sheet Metal Workers
Westside Fair Housing Council, Los Angeles
WNC & Associates, Costa Mesa
NC:cm 6/26/01 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****