Current through Register 2024 Notice Reg. No. 38, September 20, 2024
(a) Definitions.
The definitions set forth in this regulation shall govern the construction of
Revenue and Taxation Code section
214,
subdivision (g):
(1) "Low-income housing tax
credits" means that the property owner is eligible for and receives state
low-income housing tax credits pursuant to Revenue and Taxation Code sections
12205,
12206,
17057.5,
17058,
23610.4
and
23610.5
or federal low-income housing tax credits pursuant to section 42 of the
Internal Revenue Code.
(2)
"Government financing" means financing or financial assistance from local,
state or federal government used for the acquisition, rehabilitation,
construction, development, or operation of a low-income housing property in the
form of:
(1) tax-exempt mortgage revenue
bonds;
(2) general obligation
bonds;
(3) local, state or federal
loans;
(4) local, state or federal
grants;
(5) any loan insured, held,
or guaranteed by the federal government; or
(6) project-based federal funding under
section 8 of the Housing Act of 1937. The
term "government financing" does not include properties that solely receive
federal rental assistance through tenant rent-subsidy vouchers under section
8 of the Housing Act of
1937.
(3) "Other legal
document" means a document that is adopted as a resolution or statement of
policy by an organization's board of directors, or executed by an
organization's chief executive officer, provided that the board of directors
has delegated this authority in writing to the chief executive officer, that
restricts the property's use to low-income housing, such that a minimum of 90%
of the units of the property are made continuously available to or occupied by
lower income households at rent levels that do not exceed those prescribed by
section
50053
of the Health and Safety Code.
(4)
"Lower income households" means "lower income households" as defined by section
50079.5
of the Health and Safety Code.
(5)
"Recorded deed restriction" means a deed recorded as an encumbrance against
title to the property in the official records of the county in which the
property is located, which specifies that all or a portion of the property's
usage is restricted to rental to lower income households and identifies the
number of units restricted to use as low-income housing.
(6) "Regulatory agreement" means an
enforceable and verifiable agreement with a government agency that has provided
low-income housing tax credits or government financing for the acquisition,
rehabilitation, construction, development or operation of a low-income housing
property that restricts all or a portion of the property's usage for rental to
lower income households. The regulatory agreement shall identify the number of
units restricted for use as low-income housing, specify the maximum rent
allowed for those units, and be recorded in the county in which the property is
located. Until such time as the Regulatory Agreement is finalized and recorded,
the Preliminary Reservation Letter from the California Tax Credit Allocation
Committee or California Debt Limit Allocation Committee Bond Cap Allocation
Letter is acceptable.
(b)
Qualified Claimants. Claimants may qualify for the welfare exemption for
low-income housing properties provided that the requirements set forth in
either (1) or (2) below are met:
(1) All
claimants listed under Revenue and Taxation Code section
214,
subdivision (g)(1) as a qualifying organization, including limited partnerships
in which the managing general partner is an eligible nonprofit corporation or
an eligible limited liability company, may qualify for the exemption for a
particular property provided that:
(A) the
claimant receives low-income housing tax credits or government financing for
the particular property; and
(B)
the property is subject to a recorded deed restriction or a regulatory
agreement which is recorded in the county in which the property is
located.
(2) All
low-income housing properties, subject to restrictions imposed by an other
legal document, defined in subdivision (a)(3) above, owned by claimants listed
under Revenue and Taxation Code section
214,
subdivision (g)(1) as a qualifying organization, other than limited
partnerships in which the managing general partner is an eligible nonprofit
corporation or an eligible limited liability company, qualify for the welfare
exemption but the amount of the exemption shall not exceed $20,000,000 in
assessed value for a single claimant with respect to a single or multiple
properties as provided in Revenue and Taxation Code section
214,
subdivision (g)(1)(C).
(c) Low-Income Housing Tax Credits and
Government Financing. For purposes of subdivision (b)(1)(A) above, a property
has low-income housing tax credits or government financing, as defined in
subdivisions (a)(1) and (a)(2), respectively, for the period of time that a
regulatory agreement or recorded deed restriction restricts the use of all or
any portion of the property for rental to lower income households even if the
government financing has been refinanced or has been paid in full, or the
allocation of the low-income housing tax credits has terminated or expired,
provided that the government agency that is a party to the regulatory agreement
continues to monitor and enforce compliance with the terms of the regulatory
agreement.
(d) Percentage of Units
and Rent.
(1) For claims qualifying under
subdivision (b)(1) above, an exemption shall be granted equal to that
percentage of the value of the property, which is made continuously available
for rental to or occupied by lower income households at rents that do not
exceed those prescribed by section
50053
of the Health and Safety Code, or, to the extent that the terms of the
regulatory agreement or recorded deed restriction conflict with section 50053,
rents do not exceed those prescribed by such terms.
(2) The percentage of the value of the
property qualifying for the exemption is based on the actual use of the
property for rental to lower income households for the qualifying rent, and is
not limited to the percentage designated for use by lower income households in
the regulatory agreement, recorded deed restriction, or other legal document.
Units reserved for the resident property manager are included in the percentage
of units that qualify for the exemption.
1. New
section filed 6-23-2006; operative 7-23-2006 (Register 2006, No.
25).
2. Change without regulatory effect amending subsection (b)(2)
filed 1-29-2020 pursuant to section
100, title 1, California Code of
Regulations (Register 2020, No. 5).
Note: Authority cited: Section
15606,
Government Code. Reference: Section
214,
Revenue and Taxation Code.
