BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 1626|
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THIRD READING
Bill No: AB 1626
Author: Torlakson (D)
Amended: 1/20/00 in Senate
Vote: 21
SENATE HOUSING & COMM. DEV. COMMITTEE : 4-0, 1/24/00
AYES: Alarcon, Bowen, Escutia, Vasconcellos
NOT VOTING: Costa, Johannessen, Monteith
SENATE APPROPRIATIONS COMMITTEE : 10-0, 2/7/00
AYES: Johnston, Alpert, Bowen, Johnson, Karnette, Kelley,
Leslie, McPherson, Mountjoy, Vasconcellos
NOT VOTING: Burton, Escutia, Perata
ASSEMBLY FLOOR VOTE : Not Relevant
SUBJECT : Taxation: low-income housing
SOURCE : Local Initiatives Support Corporation
Enterprise Foundation
DIGEST : This bill increases the annual low-income
housing tax credit limit from $35 million to $50 million.
NOTE: Senate amendments delete previous version. As it
left the Assembly, the bill related to building standards.
ANALYSIS : The federal Tax Reform Act of 1986 and the
Reconciliation Act of 1989 created low-income housing tax
credits to stimulate the production and rehabilitation of
affordable housing. The federal tax credit is limited in
CONTINUED
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each state to $1.25 per capita per year. California's 1999
tax credit allocation was approximately $50 million.
California enacted a similar state low income housing tax
credit program to augment the federal tax credit program
(AB 53, Klehs, 1987). The state tax credit is only
available to projects that receive federal tax credits; it
supplements the federal tax credit program. The state tax
credit is limited to $1.25 per capita but it cannot exceed
$35 million per year. Last year, the state's tax credit
program was extended to last as long as the federal program
remains in effect (AB 97, Torlakson, 1999).
The California Tax Credit Allocation Committee (TCAC)
administers both the state and federal low income tax
credit programs. Based on a competitive application
process, TCAC allocates the tax credits to housing
developers who then sell the credits to investors to raise
capital to build affordable housing units. Investors
typically pay 50 to 75 cents for each dollar of tax credit.
The programs have financed approximately 59,000 affordable
rental housing units, and leveraged $3 billion in
additional private and public funds.
Housing advocates want to increase the annual amount of low
income housing tax credits in order to provide more
affordable housing.
This bill increases the annual low-income housing tax
credit limit from $35 million to $50 million.
Comments
Permanently increasing the cap . Since 1987, the annual
state low income housing tax credit cap was $35 million.
Responding to increasing demands for affordable housing,
the Legislature increased the cap to $50 million for 1998
and 1999 (AB 168, Torlakson, 1998). Each year, the demand
for tax credits exceeds available tax credits: $80 million
in 1994; $124 million in 1995; $177 million in 1996; $177
million in 1997; and $134 million in 1998. Last year, the
Committee received 133 applications totaling $255 million
but only 31 (23%) received tax credits, totaling $53
million. This bill permanently increases state tax credits
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to help meet this demand.
Dual benefit . Based on a competitive application process,
housing developers receive an allocation of low income
housing tax credits from the Tax Credit Allocation
Committee. The developers then sell the credits to
investors to raise capital to build affordable housing
units. Investors typically pay 50 to 75 cents for each
dollar of tax credit. The state credit is claimed over a
four-year period. This bill benefits both investors and
housing developers.
Meeting the needs . California's population continues to
grow at a rapid rate and housing construction cannot keep
up with demand. State housing officials estimate that we
need to annually build 250,000 new homes to meet the demand
but only 139,000 new homes were built last year. This year
an estimated 152,000 new homes will be built, which is
still 100,000 units short. An estimated 1.45 million
housing units need to be rehabilitated or replaced. Also,
an estimated two million households have unaffordable
housing costs, those paying excessive proportions of their
income for housing. These factors all point to a need to
encourage more affordable home construction. This bill
provides an additional funding source to meet the state's
affordable housing needs.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
Fiscal Impact (in thousands)
Provisions 2000-01 2001-02 2002-03 2003-04 2004-05
2005-06 Fund
Credit -0- 1,000 2,000 7,000
12,000 15,000 General
Increase
SUPPORT : (Verified 2/8/00)
Local Initiatives Support Corporation (co-source)
Enterprise Foundation (co-source)
Department of Finance
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State Treasurer Phil Angelides
Western Center on Law and Poverty
California Rural Legal Assistance Foundation
California Labor Federation, AFL-CIO
California Building Industry Association
American Association of Retired Persons
Congress of California Seniors
California Church Impact
Lutheran Office of Public Policy-California
Friends Committee on Legislation of California
Catholic Charities of San Jose
Council of Churches of Santa Clara County
Consumer Federation of California
Shelter Partnership, Los Angeles
Southern CA Association of Non-Profit Housing
Non-Profit Housing Association of Northern California
Midpeninsula Housing Coalition
Bridge Housing Corporation, San Francisco
Los Angeles Housing Law Project
Self-Help Enterprises, Visalia
Shelter Services for Women, Santa Barbara
Los Angeles Community Design Center
USA Properties, Sacramento
MAAC Project, National City
People's Self-Help Housing, San Luis Obispo
Corporation for Supportive Housing, Oakland
Neighborhood Housing Services of Orange County
San Francisco Housing Development Corporation
California Affordable Housing Law Project, Oakland
San Diego Fair Housing Council
Greater Richmond Interfaith Program
Mercy Charities Housing, San Francisco
Heartland Human Relations, La Mesa
Coalition for Low Income Housing, San Francisco
Cambridge Crisis and Homeless Services, Concord
Orange County Housing and Community Development Department
Inquilinos Unidos, Los Angeles
Chinatown Community Development Center, San Francisco
Nevada County Housing and Community Services
New Economics for Women, Los Angeles
Community Resources Associates, Inc., Clayton
California Housing Partnership Corporation, San Francisco
Community Housing Development Corporation, Richmond
Los Angeles Community Design Center
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Home Buyer Assistance Center, Oakland
East Oakland Community Development Corporation
The Marin Housing Council
La Raza Centro Legal, San Francisco
Burbank Housing Development Corporation, Santa Rosa
Ecumenical Association for Housing, San Rafael
Human Rights/Fair Housing Commission, Sacramento
O.N.E. Company, Inc., Los Angeles
Sacramento Housing and Redevelopment Agency
Keyser Marston Associates, San Francisco
Family Assistance Program, Los Angeles
Low Income Housing Fund, San Francisco
Kings County Housing Authority
CHISPA, Salinas
Century Housing Corporation, Culver City
Hollywood Community Housing Corporation, Los Angeles
Housing Authority of the City of Alameda
Community Economics, Oakland
Rubicon Programs, Richmond
St Joseph Health System, Orange
Orange County Community Housing Corporation, Santa Ana
InnVision, San Jose
WNC Associates, Costa Mesa
Shasta Housing Development Corporation, Redding
Coachella Valley Housing Coalition, Indio
Affordable Housing Network, San Jose
Sacramento Mutual Housing
Housing Rights Committee of San Francisco
Suburban Alternatives Land Trust, Novato
Esperanza Community Housing Corporation, Los Angeles
SAMCO, San Jose
Northbay Ecumenical Homes, Novato
Pajaro Valley Housing Corp., Watsonville
Community Housing of North County, Escondido
Merritt Community Capital, Oakland
Saben Investments, Inc., North Hills
The Agora Group, Goleta
Herman and Oliver: Architecture, San Rafael
Community Housing Developers, San Jose
Palo Alto Housing Corporation
Mental Health Association, San Francisco
Housing Authority of the City of Santa Barbara
Interfaith Housing, San Diego
South County Housing, Gilroy
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California Mobilehome Resources and Action Association
Gubb and Barshay LLP, San Francisco
Coalition for Economic Survival, Los Angeles
Barbara Sanders and Associates, Oakland
Sonoma County People for Economic Opportunity
Shelter Inc., Concord
Renee Franken and Associates, Carmichael
NC:sl 2/9/00 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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