Given changes in the equity market, the California Tax Credit Allocation Committee has been working to find policy solutions for shoring up allocated 2016 projects. A previously mentioned hybrid 4%/9% policy change is now being proposed for 2016 second round projects. Those wishing to comment on the policy proposal may email Executive Director Mark Stivers at mark.stivers@treasurer.co.gov by 5pm Friday, February 17. The target date to implement changes is March 15, 2017.
The policy changes would allow a hybrid 9%/4% structure – providing additional 4% tax credit equity on excess basis. Further details can be summarized as follows:
- Application: 2016 second round awardees must submit a revised 9% application and a new 4% application by March 13 (note this date presupposes the new policy will be accepted by the Board on March 15).
- Selected projects must maintain the targeting, point score, and amount of public funds stated in the initial 9% staff report.
- Extended Deadline – The readiness closing deadline for all 2016 second round projects extended to the later of
- a) the date that is two months later than the readiness closing deadline stated in the project’s reservation letter; or b) June 30, 2017.
- Exchange of 2016 Credits for 2017 Credits: For NEW CONSTRUCTION projects only that seek permission to convert and upon committee approval of the proposed regulation changes, TCAC will allow an exchange of 2016 credits for 2017 credits to reset the placed in service deadline.
- No Penalty for Return of Credits: any project, whether seeking conversion or not, that is unable to close by its extended closing deadline, TCAC will allow the sponsor to return the 2016 credit reservation without negative points and reapply for 9% credits at a higher amount.
See the full details of the policy proposal here.
Novogradac has also written a blog entry on how California’s hybrid structure might work.
