AB 3072

Bill Subjects

Abstract

Existing law establishes a low-income housing tax credit program pursuant to which the California Tax Credit Allocation Committee provides procedures and requirements for the allocation, in modified conformity with federal law, of state insurance, personal income, and corporation tax credit amounts to qualified low-income housing projects that have been allocated, or qualify for, a federal low-income housing tax credit, and farmworker housing. Existing law limits the total annual amount of the state low-income housing credit for which a federal low-income housing credit is required to the sum of $70,000,000, as increased by any percentage increase in the Consumer Price Index for the preceding calendar year, any unused credit for the preceding calendar years, and the amount of housing credit ceiling returned in the calendar year. Existing law additionally allows a state credit, which is not dependent on receiving a federal low-income housing credit, of $500,000 per calendar year for projects to provide farmworker housing. For purposes of determining the credit amount, existing law defines the term "applicable percentage" depending on, among other things, whether the qualified low-income building is a new building that is not federally subsidized, a new building that is federally subsidized, or is an existing building that is "at risk of conversion." This bill, under the law governing the taxation of insurers, the Personal Income Tax Law, and the Corporation Tax Law, for calendar years beginning in 2019 through the 2023 calendar year, inclusive, would increase the aggregate housing credit dollar amount that may be allocated among low-income housing projects by an additional $300,000,000, as specified, and would allocate to farmworker housing projects $25,000,000 per year of that amount. The bill, under those laws, would modify the definition of applicable percentage relating to qualified low-income buildings to depend on whether the building is a new or existing building and federally subsidized, or a building that is, among other things, at least 15 years old, serving households of very low income or extremely low income, and will complete substantial rehabilitation, as specified. Existing law requires the committee to allocate the housing credit on a regular basis, as provided, in accordance with a qualified allocation plan that includes specified provisions, including a requirement that all housing sponsors, as defined, demonstrate at the time the application is filed that the project meets specified threshold requirements. This bill, with respect to the allocation of a credit pursuant to the Personal Income Tax Law, on or after January 1, 2019, would require that the housing sponsor demonstrate that it will invest an amount in the project at least equal to the amount of credit allocated to it. The Personal Income Tax Law and the Corporation Tax Law, in modified conformity with federal law, generally disallow passive activity loss and passive activity credits for any taxable year in computing taxable income, but, in the case of a natural person, allow an offset in the case of the low-income housing tax credit of up to $75,000 for any taxable year for all rental real estate activities in which the individual actively participated in the taxable year, as provided. This bill, under the Personal Income Tax Law and the Corporation Tax Law for taxable years beginning on and after January 1, 2019, and before January 1, 2024, would instead provide that the dollar limitation for the offset for rental real estate activities does not apply to the low-income housing tax credit program. This bill would take effect immediately as a tax levy.