Affordable housing finance
Volume cap
IRC § 146's annual per-state ceiling on private activity bonds. CDLAC allocates California's; no cap award means no tax-exempt bonds and no 4% credits.
Definition
Each state may issue only a fixed annual amount of tax-exempt private activity bonds — the volume cap of IRC § 146, set by an indexed per-capita formula with a small-state minimum. Rental housing shares the cap with every other private-activity use. In California, CDLAC allocates it under the CDLAC regulations, scoring qualified residential rental applications whenever demand exceeds supply; unused cap can be carried forward for up to three years.
Why it matters in an underwrite
Volume cap is the binding constraint on the 4% pipeline: when California's queue is oversubscribed, "as-of-right" credits wait behind a scored allocation round, and a missed round is months of land carry and rate exposure. The 2025 cut of the bond-financing test to 25% stretches each dollar of cap across more deals — but it also invites more applications, so underwrite the CDLAC timeline and scoring tier, not just the award amount.
Sources & related guides
See also
See the term in the law itself
Read the controlling text in the Code Library, or ask the AI how it applies to your project.
Last reviewed 2026-07-29. General information, not legal advice.