The California Tax Credit Allocation Committee (CTCAC) issued an important notice to developers who have received Sec. 1602 tax credit exchange funds.

Developers who have not expended 100 percent of their funds by Dec. 31, 2010, must have paid or incurred at least 30 percent of the project’s total adjusted basis in land and depreciable property that is reasonably expected to be part of the low-income housing by the end of the year, says the notice from Executive Director William Pavao.

If the project fails to meet the 30 percent test by year’s end, all Sec. 1602 funds that have not been drawn down by that date to pay for eligible costs incurred will be forfeited.

CTCAC is currently preparing forms for the 30 percent test, which are expected to be available by Sept. 1.