17057.7.
(a) (1) For taxable years beginning on or after January 1, 2023, and before January 1, 2028, there shall be allowed to a taxpayer a credit against the “net tax,” as defined in Section 17039, pursuant to a credit reservation made by the committee for to a qualified developer and a credit transfer of the right to claim a credit to the taxpayer by the qualified developer related to
the purchase of a qualified development, in an amount determined pursuant to paragraph (2).(2) (A) Subject to subparagraph (B) and except as provided in subdivision (k), the credit shall not exceed one million dollars ($1,000,000) or the sum of both of the following, whichever is less:
(i) Fifty percent of the federal capital gains taxes paid by the taxpayer based on the gains recognized for the sale of property a qualified development to the qualified developer.
(ii) Fifty percent of the state income taxes paid by the taxpayer derived
from the capital gains recognized for the sale of the property a qualified development to the qualified developer.
(B) The credit shall be limited to twenty thousand dollars ($20,000) per housing unit or space on the property. a qualified development.
(C) (i) Fifty percent of the estimated credit amount shall be allocated to the taxpayer in the taxable year in which the sale of the property
qualified development is made to the qualified developer.
(ii) The remainder of the estimated credit amount shall be allocated to the taxpayer in the taxable year following the sale of the property. qualified development. The taxpayer shall demonstrate to the committee the actual amount of federal and state income taxes paid that were derived from the sale of the property qualified development to the qualified developer and the credit amount allocated to the taxpayer pursuant to
this clause shall be reduced if the actual taxes paid are less than the estimated taxes paid.
(b) The qualified developer shall apply for a credit reservation of up to one million dollars ($1,000,000).
(c) The estimated amount of credit transferred to the taxpayer from a qualified developer shall be established at the close of escrow and included in the closing or transaction documents.
(d) In the case where the credit allowed by subdivision (a) exceeds the “net tax,” the excess may be carried over to reduce the “net tax” in the following taxable year, and succeeding seven years if necessary, until the credit is exhausted.
(e) For purposes of this
section, the committee shall do all of the following:
(1) Establish a procedure for a qualified developer to apply for and receive a reservation of a credit.
(2) Establish minimum criteria for approving an application to reserve tax credits, including, but not limited to, all of the following:
(A) The qualified developer shall have a successful record of using tax credits or other public funding sources to preserve or acquire affordable housing in the state.
(B) The credit shall not be used to acquire an assisted housing development, as defined in Section 65863.10 of the Government Code, for which the development’s rent and income level restrictions
will terminate or the federally insured mortgage or rent subsidy contract on the property is eligible for prepayment or termination more than five years after the date of acquisition.
(C) The qualified developer shall not hold more than three reservations under this section and Section 23610.6 at any time. Once the qualified developer transfers a credit to a taxpayer, the qualified developer does not hold that tax credit reservation.
(D) The qualified developer agrees to renew all project-based rental subsidies for the maximum term available and to seek additional renewals throughout the term of the regulatory agreement, if applicable.
(E) The qualified developer agrees not to evict tenants other than for good cause, as
that term is used in Section 42 of Title 26 of the United States Code.
(F) The qualified developer agrees to comply with tenant selection and lease requirements established by the committee.
(3) Enter into credit reservation agreements with qualified developers. The committee shall reserve credits on a first-come-first-served basis to qualified developers who meet the threshold criteria established by the committee. Credit reservation agreements shall include the amount of credit reserved to the qualified developer and the amount of time, based on criteria adopted by the committee, in which the qualified developer shall transfer the credit to a taxpayer. The criteria to determine a timeline in which a credit must be transferred shall take into account market conditions in the
state.
(4) Allocate tax credits to taxpayers and establish a procedure, in consultation with the Franchise Tax Board, to confirm the credit amount allocated to a taxpayer.
(5) Adopt all other rules and regulations necessary to implement this section.
(6) Provide guidance to qualified developers that have a reservation agreement to prioritize, to the greatest extent possible, the acquisition of properties in which a majority of the occupants are lower income households.
(f) A taxpayer that receives a credit allocation shall provide the committee with the taxpayer’s tax returns for the taxable year in which the taxpayer received the credit allocation and
for the subsequent four taxable years.
(g) The aggregate amount of credits that may be allocated pursuant to this section and Section 23610.6 is zero dollars ($0), unless otherwise specified in any bill providing for appropriations related to the Budget Act, and in no case shall exceed five hundred million dollars ($500,000,000). Any remaining credits following the reduction made pursuant to clause (ii) of subparagraph (C) of paragraph (2) of subdivision (a) shall be available for rereservation and reallocation by the committee.
(h) For purposes of this section, the following terms are defined as follows:
(1) “At-risk multifamily housing development” means a rental housing development
in the state of five or more dwelling units in which at least 50 percent of the units are subject to a deed restriction with a public entity that restricts rent and income levels to lower income households and at least one of the following criteria is met:
(A) The restrictions on rent and income levels will terminate within five years.
(B) The federally insured mortgage or rent subsidy contract on the property is eligible for prepayment or termination anytime within five years.
(C) The restrictions on rent and income levels are recorded pursuant to paragraph (2) of subdivision (e) of Section 65863.11 of, or Section 65863.13 of, the Government Code or in connection with interim or
acquisition financing.
(2) “Committee” means the California Tax Credit Allocation Committee.
(3) “Department” means the Department of Housing and Community Development.
(4) “Eligible nonprofit corporation” means a California nonprofit corporation whose primary activity is the development and preservation of affordable rental housing, as determined by the committee.
(5) “Lower income households” has the same meaning as defined in Section 50079.5 of the Health and Safety Code.
(6) “Qualified developer” means a local public entity, as defined in Section 50079 of the Health and Safety Code, an
eligible nonprofit corporation, a limited partnership in which the managing general partner is an eligible nonprofit corporation, a limited liability company in which the managing member is an eligible nonprofit corporation, or a resident organization, as defined in subdivision (l) of Section 50781 of the Health and Safety Code, that commits, at application to the committee and under penalty of perjury, to employing a tax credit reservation allowed by this section in the acquisition of a qualified development.
(7) “Qualified development” means any either of the following:
(A)A mobilehome park in the state and has secured a loan from the department pursuant to Section 50783 or 50784.5 of the Health and Safety Code.
(B)A mobilehome park, in the state, in which at least 50 percent of the current residents are lower income households and for which the qualified developer agrees to enter into a regulatory agreement with the committee for a minimum of 55 years that requires both of the following:
(i)All vacant spaces shall be rented at a space rent that does not exceed 50 percent of maximum rent limits established by the committee at 60 percent of the area median income.
(ii)The space rent for existing residents at the time of the qualified developer’s acquisition of the property, both during the 12 months preceding the acquisition and during the term of the regulatory agreement,
shall not increase more than 5 percent in any 12-month period.
(C)
(A) An at-risk multifamily housing development of five or more dwelling units in the state for which the qualified developer agrees to enter into a regulatory agreement with the committee for a term of at least 55 years to do either of the following:
(i) Maintain the existing affordability
requirements as may be amended by the committee to ensure project feasibility.
(ii) In the case of a termination of a rent subsidy contract, restrict the assisted or previously assisted units to affordable rents established by the committee at 60 percent or less of the area median income and occupancy by households meeting the income limit at the respective area median income level for each unit.
(D)
(B) An unrestricted multifamily rental housing development of five or more dwelling units in the state for which the qualified
developer agrees to enter into a regulatory agreement, with the committee for that development, that requires, for a minimum of 55 years, that all vacant housing meet both of the following requirements:
(i) Be rented to low-income households, so no household earns more than 80 percent of the area median income at initial occupancy and the average income limit is no more than 60 percent of the area median income.
(ii) Be rented to low-income households at affordable rents that do not exceed maximum rent limits established by the committee at 80 percent of the area median income. The average affordable rent shall not exceed 60 percent of the area median income.
(8)“Space rent” means the rent charged for occupancy of a space in a mobilehome park. “Space rent” does not include the rent charged for occupancy of a mobilehome or other structure on that space.
(9)
(8) “Vacant housing” means dwelling units that are vacant at the time the property is sold to the qualified developer and dwelling units that become vacant after the property has been sold to the qualified developer.
(10)“Vacant spaces” means spaces in a mobilehome park that are vacant at the time the property is sold to the qualified developer and spaces in a mobilehome park that become vacant after the property has been sold to the qualified developer.
(i) Rules and regulations
adopted by the committee to implement this section are exempt from the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).
(j) This section shall remain in effect only until December 31, 2028, and as of that date is repealed.
(k) Unless otherwise specified in any bill providing for appropriations related to the Budget Act, for taxable years beginning on or after January 1, 2023, and before January 1, 2028, the amount of credit allowed pursuant to this section shall be zero dollars ($0).