Guidelines Altered for Obtaining Tax Credits to Build Affordable Housing

"The federal tax credits, along with tax-exempt bonds allocated by the state, are among the few sources of low-cost financing available for affordable apartments at a time when Southern California faces an acute and worsening shortage of affordable housing. Land and construction costs are so high that building affordable apartments is virtually impossible without low-cost financing, developers and housing experts say."

"Angelides said the new system for distributing credits will be designed to be "as objective as possible" so that developers won't have to depend on pure luck to win tax credits. In addition, Angelides said, his office is lobbying "very hard" to have Congress increase the state's total of tax credits."

""The dollar amount of applications for tax credits is about four times the amount we have to award each year," Angelides said. Besides the $400 million in federal credits, the committee distributes about $50 million in state tax credits."

California's Tax Credit Allocation Committee has implemented new rules for distributing federal tax credits used to finance affordable housing development. The committee distributes over $400 million in federal tax credits annually, along with approximately $50 million in state credits. These credits are critical financing sources for private investors and nonprofits building affordable apartments, as high land and construction costs make affordable housing development impossible without low-cost financing. The previous lottery-based system faced criticism for its lack of objectivity. The new rules aim to be more objective, reducing developers' reliance on chance. Demand significantly exceeds available credits, with applications totaling approximately four times the annual award amount, indicating substantial developer interest in affordable housing projects.

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