The California Tax Credit Allocation Committee is proposing several significant rule changes to the state’s low-income housing tax credit program, including updating the geographic apportionments to create a new city of Los Angeles region and eliminating what is known as the “50 percent rule.”

Officials have scheduled a series of hearings around the state to solicit comments on the possible changes.  The hearings will be Nov. 7 in Los Angeles, Nov. 8 in San Diego, Nov. 13 in Oakland, and Nov. 14 in Sacramento.

One of TCAC’s geographic apportionments has been Los Angeles County. TCAC is proposing to split this apportionment in two–city of Los Angeles (17.6 percent) and the balance of L.A. County (17.2 percent). If this proposal is adopted, it would take effect in 2014.

Other changes are on the table for next year.

This includes a proposal to end the 50 percent rule and discontinue funding lower-scoring projects within the geographic apportionment.

The 50 percent rule requires that the last funded project in its region request no more than twice what remains in the apportionment at the time. That means the apportionment must still have at least 50 percent of what the pending application is requesting. In addition, TCAC may reserve credits for a project so long as that reservation would not cause officials to award more than 125 percent of the amount originally available to the region.

The intent behind both rules was to assure that officials did not “over-reserve” credits and leave subsequent-round competitors with significantly fewer credits. In explaining the proposed change, TCAC says the 125 percent rule alone accomplishes that objective.

Under its program rules, TCAC has also been able to award small amounts remaining in a regional apportionment by skipping to applications with smaller credit requests. It can skip larger-request projects even when that project receives a score that is up to five points more than the smaller-request application.

The problem with this is that higher-quality projects have lost out to smaller deals. “By eliminating the skipping provision, TCAC would discontinue funding lower-scoring projects,” says the staff.

In another move, officials want to prohibit developers from pulling a high-scoring application in order to help advance one of their lower-scoring applications. If this happens, TCAC would skip that second project and fund the next highest-scoring application.

Other changes on the table include:

  • Increasing the at-risk housing type goal to 15 percent;
  • Establishing a 200-square-foot minimum requirement for competitive single-room occupancy units; and
  • Strengthening the scoring of general partners and property management entities based upon performance with tax credit projects.

For more about the proposed changes and the hearings, visit