§ 5102. QRRP Application Procedures and Requirements.

(a) Applicants seeking an Allocation shall be considered in accordance with the applicable provisions of these regulations and the submission of a complete QRRP Application

(b) All applications shall include the following threshold requirements:

(1) Demonstrated site control. The Applicant shall provide evidence that the Project site is at the time of Application submission within the control of the Applicant or Project Sponsor. Applicants shall provide information regarding the current owner of the project property, if other than the Project Sponsor. Except as provided below for reapplications, a current preliminary or final title report, or, for projects that will be located on Native American Trust Lands, a Land Title Status Report from the Bureau of Indian Affairs or an attorney's opinion regarding chain of title and current title status, all of which shall be dated no more than ninety (90) days prior to Application deadline, shall be submitted with all applications for the purposes of this requirement. A commitment for the title insurance or a title insurance document are not acceptable substitutions for a preliminary title report, final title report, or a title report. The Committee may permit the site control title report of an unsuccessful application to be submitted, only once, in the reapplication cycle immediately following the unsuccessful application.

(A) Site control may be evidenced by any of the following:

(i) The Applicant or Project Sponsor holds fee title as evidenced by the current (within 90 days prior to the Application date) preliminary or final title report;

(ii) An executed lease agreement or lease option for the length of time the Project will be regulated under this program between the Applicant or Project Sponsor and the owner of the subject property;

(iii) An executed disposition and development agreement for the length of time the Project will be regulated under this program between the Project Sponsor and a public agency; or

(iv) A valid, current, and enforceable contingent purchase and sale agreement or option agreement between the Project Sponsor and the owner of the subject property. Evidence must be provided at the time of the application that all extensions and other conditions

necessary to keep the agreement current through the application filing deadline have been executed.

(v) Valid, current and enforceable purchase and sale agreements, contingent purchase sale or option agreements in combination between the Project Sponsor, a third party and the owner of the subject property such that the Committee can determine that upon a grant of Allocation the Project Sponsor has a right to acquire the subject property.

(vi) The Executive Director may determine that site control has been demonstrated where a local agency has documented its intention to acquire the site, or portion of the site, through eminent domain proceedings as evidenced by order(s) of possession.

(2) Local Approvals and Zoning. The Project Sponsor shall provide evidence, no later than the application due date for the allocation round in which the Project is seeking an allocation, that the project meets the requirements of Section 10325(f)(4) of the CTCAC regulations.

(3) Project Sponsor and Project Developer. If not requesting experience points pursuant to section 5105(f), the application must include a summary of the Project Sponsor and Project Developer experience developing or rehabilitating housing with tax-exempt bond financing. A list of projects must be included. The list may take the form of the CTCAC Experience Attachment.

(4) Legal Status of development team members.

(A) Applicants shall provide information regarding the legal status of the Project Sponsor and Developer.

(i) Financial Viability. Disclose any legal or regulatory action or investigation that may have a material impact on the financial viability of the project or the Project Sponsor and Developer. The disclosure should be limited to actions or investigations in which the applicant or the applicant's parent, subsidiary, or affiliate involved in the management, operation, or development of the project has been named a party. Not Applicable is an unacceptable response.

(ii) Fraud, Corruption, or Serious Harm. Disclose any legal or regulatory action or investigation involving fraud or corruption, or health and safety where there are allegations of serious harm to employees, the public, or the environment. The disclosure should be limited to actions or investigations in which the Project Sponsor and Developer or the Project Sponsor's and Developer's current board member (except for volunteer board members of non-profit entities), partner, limited liability corporation member, senior officer, or senior management personnel has been named a defendant within the past ten years. Not Applicable is an unacceptable response.

(iii) Disclosures required under (i) and (ii) should include civil or criminal cases filed in state or federal court; civil or criminal investigations by local, state, or federal law enforcement authorities; and enforcement proceedings or investigations by local, state or federal regulatory agencies. The information provided must include relevant dates, the nature of the allegation(s), charters, complaint or filing, and the outcome. For a publiclytraded company, the relevant sections of the company's 10K, 8K, and 10Q most recently filed with the Securities and Exchange Commission may be attached in response to question #1. With respect to a response for question #2, previous 10K, 8K, and 10Q filings of the company may be attached if applicable.

(B) Applicants shall disclose the following information for the Project Sponsor, Developer, General Contractor, and Property Manager:

(i) Fair Housing, Anti-Discrimination, and Labor Laws. Disclose any regulatory or investigative proceeding related to affordable housing development or management by a local, state, or federal agency relating to an alleged, pending, or closed violation of fair housing, anti-discrimination, or labor laws and the status of the proceeding, as applicable.

(5) Enforceable Financing Commitments.

(A) Applicants shall provide evidence of enforceable financing commitments for at least fifty percent (50%) of the acquisition and construction financing, or at least fifty percent (50%) of the permanent financing, of the proposed project’s estimated total acquisition and construction or total permanent financing requirements.

(B) An “enforceable financing commitment” must:

(1) be in writing, stating rate and terms, and in the form of a loan, grant or an approval of the assignment/assumption of existing debt by the mortgagee;

(2) be subject only to conditions within the control of the applicant, but for obtaining other financing sources including an award of Tax Credits;

(3) have a term of at least fifteen (15) years if it is permanent financing;

(4) demonstrate feasibility for fifteen (15) years at the underwriting interest rate, if it is a variable or adjustable interest rate permanent loan;

(5) be executed by a lender other than a mortgage broker, the applicant, or an entity with an identity of interest with the applicant, unless the applicant is a lending institution actively and regularly engaged in residential lending; and

(6) be accepted in writing by the proposed mortgagor or grantee, if private financing.

(6) Legislative Districts and Census Tracts. Applicants shall provide the following: Federal Congressional District in which the proposed Project is located, State Senate District in which the proposed Project is located, State Assembly District in which the proposed Project is located, Census Tract in which the proposed Project is located.

(7) Prior Tax-Exempt Allocation Award. The Application will provide a narrative explanation of the circumstances surrounding the prior allocation and why additional allocation is being requested.

(8) Project Description. Applicant shall submit a narrative description of the proposed Project. The description must contain, at a minimum, the following details: 1) the number of acres of the site (include topography and special features), 2) a description of the surrounding neighborhood, 3) the targeted population for the project (i.e., large families, seniors, etc.), 4) the expected start and completion date of construction/rehabilitation, 5) physical features of the project (i.e., description of buildings, grounds, project amenities, etc.), 6) unit configuration, 7) unit amenities, 8) scope of rehabilitation work, and 9) if applicable, a description of other unique features of the project. 10) (a) If the Application is submitted under a non-competitive process, the Application must include a description of the Project Type and Characteristics, including the construction type and proposed tenant population pursuant to Section 5000. (b) If the Application is submitted under a competitive process, Project Type and Characteristics documentation must be included pursuant to Sections 5000 and 5100.

(9) Detailed Unit Affordability Information.

(A) The application will include the Federal Bond-Election of 20% at 50% Area Median Income, or 40% at 60% Area Median Income.

(B) For At-Risk projects and 4% low income housing tax credit projects, this shall mean that the Project units must have Gross Rents that are restricted to households whose incomes must be 50% or less of the AMI; or Gross Rents that are restricted to households whose incomes must be 60% or less of the AMI. Applications not meeting this minimum requirement will be deemed incomplete.

(C) The Application will include tables with the following information on the Restricted Rental Units: Number of Bedrooms/Number of Bathrooms, Unit Size in square feet, number of units in subtotals and total, total square feet per unit type in subtotals and total, proposed monthly tenantpaid rent per unit (excluding utilities), proposed monthly rental subsidy per unit, proposed monthly income per unit, monthly utility allowance, monthly gross rent, percent of Area Median Income based on monthly gross rent, and annualized total rental income. The Application will include another table, Market Rate Units, including number of bedrooms, unit square feet in subtotal and total, number of units, proposed monthly tenant-paid rent per unit (excluding utilities), total proposed tenant paid rent and annualized total rental income. Application will include a table, “Managers' Units” Restricted or Market Rate. The table will include columns for number of bedrooms, unit square feet in subtotal and total, number of units, proposed monthly managerpaid rent per unit, total proposed monthly manager-paid rent and annualized total rental income. Application will include a table with total number of units (excluding manager units), total number of restricted units, percent of total restricted units, number of units at or below 50% AMI, percent of units at or below 50% AMI, number of units above 50% to 60% AMI, percent of units above 50% to 60% AMI, number of restricted rental units with 3 or more bedrooms, and percent of restricted rental units with 3 or more bedrooms. Applicants shall provide a breakdown of Project unit types, size, number of units, proposed tenant-paid rent, monthly utility allowances (if any), subsidies (if any) and unit percentage of Area Median Income (AMI) level based on monthly Gross Rent.

(10)(A) Applications that contain Recycled Bonds as a source of financing must include a commitment letter from an Issuer that:

(i) Includes signatures of all necessary and appropriate parties to the transaction,

(ii) States the requested amount of Recycled Bonds, and

(iii) States if the Recycled Bonds will be delivered at closing or before conversion.

(B) The Issuer must notify CDLAC of the use of Recycled Bonds either through the Report of Action Taken or once funds are delivered to the Project Sponsor.

NOTE: Authority cited: Section 8869.94, Government Code. Reference: Sections 8869.84(c), 8869.85(a) and 8869.85(b), Government Code.

§ 5103. Additional Requirements for Acquisition/Rehabilitation Projects.

(a) Acquisition/Rehabilitation Projects must complete a minimum of $15,000 in hard construction costs per unit, except At Risk Projects that receive only an award of Bond authority and do not receive low income housing tax credits must spend the minimum amount required by 26 U.S.C. section 147(d)(2).

(b) In a Competitive Application Process, Acquisition/Rehabilitation Projects shall meet all of the following criteria:

(1) Shall complete at least $60,000 in hard construction costs per tax credit unit; and

(2) At least 60% of hard construction costs shall be expended only on immediate health and safety improvements, seismic and accessibility improvements, and/or the replacement of major systems with a remaining useful life of less than ten years, as evidenced by a CTCAC Capital Needs Assessment.

(c) Applicants proposing rehabilitation or demolition of occupied housing shall comply with Section 10322(h)(28) of the CTCAC regulations.

(d) Except as provided below for reapplications, the Applicant shall submit a Capital Needs Assessment with report and inspection dates within 180 days prior to the Application deadline that details the condition and remaining useful life of the building's major structural components, all necessary work to be undertaken and its associated costs, as well as the nature of the work, and distinguishing between immediate and long-term repairs. The Capital Needs Assessment shall also include a fifteen (15) year reserve study, indicating anticipated dates and costs of future replacements of all major building components that are not being replaced immediately and the reserve contributions needed to fund those replacements. The Capital Needs Assessment shall be prepared by the Project's architect, as long as the architect has no identity of interest with the Project Sponsor or other member of the development team; or by a qualified independent third party who has no identity of interest with any of the members of the development team. The Capital Needs Assessment is not required if the Project, within the immediately preceding three (3) years, received an Allocation and this requirement was satisfied in the original Application. The Committee may permit the Capital Needs Assessment of an unsuccessful application to be submitted, only once, in the reapplication cycle immediately following the unsuccessful application.

NOTE: Authority cited: Section 8869.94, Government Code. Reference: Sections 8869.84(c), 8869.85(a) and 8869.85(b), Government Code.

§ 5104. Additional Requirements for Scattered Site Applications.

(a) Applications for Scattered Site Projects shall provide all information required for each site. Additional stipulations are as follows:

(1) For acquisition and rehabilitation projects, a Capital Needs Assessment report may combine information for all Project sites in one report.

(2) For new construction projects and acquisition/rehabilitation projects, a Market Study may combine information for all Project sites in one report; however, the Market Study shall have separate Rent Comparability Matrices for each site.

(3) Acquisition/Rehabilitation Projects where each location is subject to an existing Residential Rental Regulatory Agreement or a federal, state, or local operating or rental assistance agreement may provide, as an alternative to providing a market study and affordability matrices consistent with Sections 5107(b)(1) and 5104(a)(3), a comprehensive market study consistent with 26 U.S.C. Section 42(m)(1)(A)(iii). The study must be a written statement certified by a third party market analyst and the project must meet at least one of the following requirements:

(A) as certified by a third-party market analyst, the proposed tenant paid rents and income targeting will not exceed one hundred-five percent (105%) of the current rents and targeting and a vacancy rate of no more than five percent (5%); for single room occupancy and special needs housing a vacancy rate of no more than ten percent (10%); or

(B) as evidenced by copies of executed contracts, the project has been receiving federal, state, or local operating or rental assistance and will continue to receive such assistance for at least five (5) additional years. If a contract demonstrating operating or rental assistance for an additional five (5) years is not available, a letter signed by the contractor's senior official may be submitted that describes the efforts undertaken to effectuate an operating or rental assistance contract, the expected duration of the contract, and the expected contract execution date.

(4) Evidence of site control shall be required for each site.

• (5) Any maps provided shall include each site.

(b) An Applicant may seek a waiver of the Scattered Site five (5) location limit. A written request describing how the project will benefit from waiver of the location limit must be submitted no later than the application due date for the allocation round in which the Project is seeking an allocation.

(c) Each site within an Application for a Scattered Site shall be evaluated individually for points as provided in Section 5105. The total points awarded to a Project in any category shall be based on the pro-rata share of total units each site represents. For instance, if only one site meets the threshold for an award of 5 points and the site represents 40% of total units, the Project shall be awarded two (2) points for this category (40% x 5 points).

NOTE: Authority cited: Section 8869.94, Government Code. Reference: Sections 8869.84(c), 8869.85(a) and 8869.85(b), Government Code.

§ 5105. Application Evaluation and Points.

(a) The following criteria will be used to evaluate and rank all Qualified Residential Rental Project applications. Each of the items in this section shall be memorialized in the Committee Resolution.

(b) Acquisition/Rehabilitation Project Priorities (20 points maximum).

(1) A project meeting all of the following criteria shall receive 10 points:

(A) The project does not result in a distribution of net project equity, as that term is defined in Section 10302(gg) of the CTCAC Regulations, to a general partner or a related party to the general partner. For purposes of this subparagraph, there may be a buyout of a limited partner or equity distributed to a third party seller;

(B) There is no partial or full repayment of existing soft financing, except for loans less than or equal to the greater of $500,000 or 1.5% of the project’s total development costs or for temporary repayments that will be restored in the permanent financing; and

(C) The application’s developer fee limit pursuant to Section 10327(c)(2) of the CTCAC Regulations is further limited to a cash-out developer fee no greater than 80% of the CTCAC cash-out developer fee limit.

(2)(A) An At-Risk Project shall receive 20 points.

(B) A project that meets at least one of the following shall receive 9 points:

(i) A replacement or rehabilitation project approved by HUD pursuant to a Section 18 or 22 Demolition/Disposition authorization.

(ii) A project being rehabilitated under the HUD Rental Assistance Demonstration (RAD) Program, or a rehabilitation project that has received a new Section 515 loan from the United States Department of Agriculture; or

(iii) A project that received an award from HCD’s Portfolio Reinvestment Program

(iv) A project with a pre-1999 HCD loan.

(C) A project that meets at least one of the following shall receive 8 points:

(i) A project with at least $120,000 in hard construction costs per tax credit unit and is replacing at least two major building systems

(ii) A project applying as an SRO housing type, as defined in Section 10325(g) of the CTCAC regulations, and the rehabilitation will add a bathroom and complete kitchen to each unit.

(D) A project that meets at least one of the following shall receive 7 points:

(i) A project that has previously received an allocation of Low-Income Housing Tax Credits where it has been greater than 20 years from the placed in service date.

(ii) A project that has never received an allocation of Low Income Housing Tax Credits.

(c) New Construction Density and Local Incentives (10 points maximum); Acquisition/Rehabilitation Projects are not eligible for these points). A New Construction Project that meets any of the following shall receive 10 points:

(1) The local jurisdiction has approved the project pursuant to Section 65913.4 of the Government Code; or at a density greater than that allowed by the site's zoning through the use of a density bonus allowed by Government Code Section 65915; or pursuant to a local ordinance; or with concessions and/or waivers granted pursuant to Government Code Section 65915;

(2) The project is being developed at a per net acre density that meets one of the following criteria:

• (A) 100 bedrooms per net acre in a metropolitan county;

• (B) 60 bedrooms per net acre in a suburban jurisdiction;

• (C) 40 bedrooms per net acre in all other areas.

(3) The project is located in a city or unincorporated portion of a county for which HCD has designated the city or county, respectively, as pro-housing pursuant to Section 65589.9(c) of the Government Code.

(4) For purposes of this subdivision, “net acre” is defined as the acreage within the parcel boundaries after subtracting any area affected by the dedication of public right-of-way, the presence of restrictive easements, and non-buildable areas. “Metropolitan county” and “suburban jurisdiction” shall have the same meanings as in Section 65583.2 of the Government Code. Projects with land-use approvals obtained prior to January 1, 2022, shall earn full points in this category.

(d) Exceeding Minimum Income Restrictions (20 points maximum). A project shall receive points in either of the following manners:

(1) 2 points for each full percent that the average affordability of tax credit units is less than 60% of area median income subject to the Gross Rent definition; or

(2) 20 points if the average affordability of tax credit units is less than or equal to 60% of area median income, provided that at least 10% of tax credit units are restricted at or below 30% of area median income and an additional 10% of tax credits units are restricted at or below 50% of area median income, subject to the Gross Rent definition.

(e) Exceeding Minimum Rent Restrictions (10 points maximum). A project shall receive one point for each full percent that the average affordability of tax credit units is more than ten percent (10%) below the average adjusted rental rates of comparable market-rate units as demonstrated by each applicable Rent Comparability Matrix. This percentage shall be calculated separately for units of each bedroom count, with the results for each unit type weighted relative to the percentage of tax credit units of that type in the project, and the resulting percentage shall be used to determine the final point score. In cases where unit sizes of the same unit type vary,

the smallest of these units shall be the basis for comparison. When family comparables are used in addition to senior comparables (outside the 1-mile radius), points will be calculated using the family comparables.

• (f) General Partner and Management Company Experience (10 points maximum).

  • (1) A project shall receive general partner experience points in one of the following manners:

(A) The number of general partner experience points for which it is eligible pursuant to Section 10325(c)(1)(A) of the CTCAC regulations.

(B) 7 points if the project is a joint venture between an entity that receives maximum general experience points pursuant to Section 10325(c)(1)(A) of the CTCAC regulations and a BIPOC Entity, provided that the partnership agreement allocates at least 51% of the developer fee, cash flow, and net sale proceeds to the BIPOC Entity and provides the BIPOC Entity an option to purchase the development.

(C) 7 points if the sponsor is a BIPOC Entity that (i) is a general partner in at least one California Low-Income Housing Tax Credit development that has received a certificate of occupancy, or if a rehabilitation project, completed rehabilitation, within ten years of the date of application, (ii) submits the certification from a third-party certified public accountant referred to in Section 10325(c)(1)(A)(i) of the CTCAC regulations for that development, and (iii) completes training as prescribed by CTCAC prior to a project's placing in service.

• (2) A project shall receive management company experience points in one of the following manners:

(A) The number of management company points for which it is eligible pursuant to Section 10325(c)(1)(B) of the CTCAC regulations.

(B) 3 points if the management company will be the BIPOC Entity for which the project receives general partner experience points pursuant to paragraph (1)(C).

(g) Housing Types (10 points maximum; Acquisition/Rehabilitation Projects not eligible for these points). A New Construction Project that meets any of the following criteria shall receive 10 points:

(1) The project meets the criteria for any of the housing types described in Section 10325(g) of the CTCAC regulations. Points will be awarded only in one housing type.

(2) The project meets the requirements of subdivision (c) of this section or is a New Construction Project that obtained all land use approvals prior to January 1, 2022.

(h) Readiness to Proceed (10 points maximum). Projects may earn 10 points by documenting enforceable financing commitments as defined in Section 5102(b)(5) for all construction financing and demonstrating that construction can begin within 180 days, 201 days, or 222 days of the bond allocation, as assigned by the Executive Director. Additionally, Applicants shall provide evidence that all deferred-payment financing, residual receipts payment financing, grants and subsidies shown in the application are “committed” at the time of application, as described in CTCAC Regulations Section 10325(f)(8)(A)-(D), except a project is exempt from this requirement if it has funds anticipated and publicly published with provisional awardee names but not yet officially awarded in the capacity required.

• (1) Before the end of the assigned deadline, CDLAC must receive:

(A) An executed construction contract.

(B) Recorded deeds of trust for all construction financing (unless precluded by tribal trust land), binding commitments for permanent and any other required financing.

• (C) Executed limited partnership agreement with equity investor.

• (D) Issued building permits or applicable tribal documents.

(i) Grading permits may be used to meet this requirement only if the city or county does not issue building permits before grading is complete.

(ii) Documentation that the city or county approved construction to begin may be used to meet this requirement for design-build projects where the city or county does not issue building permits until designs are fully complete.

(E) Notice to proceed delivered to the contractor.

(2) If no construction lender is involved, evidence of equity partner admission and initial disbursement must be submitted by the deadline. CDLAC will conduct a financial feasibility and cost reasonableness review upon receipt. In cases of federally or state-declared emergencies (or similar events, at the Executive Director’s discretion), extensions may be granted.

(3) Failure to meet the deadline or provide sufficient documentation may result in the Executive Director issuing a notice rescinding the bond allocation for failure to be ready to proceed. Prior to the deadline, the applicant may submit one request for an extension of up to ninety (90) days, which the Executive Director may grant at their discretion. If the applicant fails to meet the requirements by the expiration of the granted extension, the bond allocation may be rescinded, subject to appeal under Section 5005. The Executive Director’s denial of an extension request, as well as any notice of rescission, is also appealable under Section 5005. The Committee may issue negative points under Section 5105(m) in connection with any allocation rescission, or with any extension granted or denied, including those addressed through an appeal under Section 5005

• (i) Access to Opportunity (10 points maximum).

  • (1) A New Construction project shall receive points in only one of the following manners:

(A)(i) Except as provided in (ii) below, 10 points if the project receives points as a Large Family project or Special Needs project pursuant to subdivision (g) (except the Special Needs project shall have at least 50% of its units set aside as permanent supportive housing), is located in a High or Highest Resource Area as specified on the CTCAC/HCD Opportunity Area Map, and at least 10% of tax credit units shall be restricted at or below 30% of area median income and an additional 10% of tax credit s units shall be restricted at or below 50% of area median income (except Special Needs projects shall be exempt from this 50% AMI requirement).

(ii) Using the sort order described in Section 5106, after projects receiving 10 points pursuant to this subdivision have been recommended for allocations that meet or exceed the following threshold, all remaining projects in each pool or set aside shall receive 9 points for meeting the requirements of this subdivision. For the purpose of awarding points per round, excluding an established waiting list, pursuant to this subdivision, 10 points shall be awarded until 48% of the amount available to a pool or set aside has been allocated or until the next eligible project in line would allocate over 52% of the amount available to the pool or set aside. Subsequently, all remaining projects in each pool or set aside shall receive 9 points for meeting the requirements of this subdivision.

(B) 9 points if the project does not receive points pursuant to subdivision (i)(1)(A). With respect to New Construction Projects, at least 10% of tax credit units shall be restricted at or below 30% of area median income and an additional 10% of tax credit s units shall be restricted at or below 50% of area median income.

(j) Service Amenities (10 points maximum). A project shall receive the number of points for which it is eligible pursuant to Section 10325(c)(4)(B) of the CTCAC regulations, except that projects not meeting one of the housing types specified in Section 10325(g) of the CTCAC regulations shall be able to choose the services provided without regard to the housing type conditions within the service amenity categories.

(k) Cost Containment (12 points maximum). A project shall receive 1 point for each full percent that the project's eligible basis is less than the project's CDLAC adjusted threshold basis limit, except that a New Construction Project that receives points as a Large Family project or Special Needs project pursuant to the conditions specified in Section 5105(i)(1)(A) and is located in a High or Highest Resource Area as specified on the CTCAC/HCD Opportunity Area Map shall receive 2 points for each full percent that the project's eligible basis is less than the project's CDLAC adjusted threshold basis limit. For purposes of this subdivision, a project's CDLAC adjusted threshold basis limit shall be the project's threshold basis limit as determined pursuant to Section 10327(c)(5) of the CTCAC regulations, except that the increase for deeper targeting pursuant to Section 10327(c)(5)(C) of the CTCAC regulations shall be limited to 80%.

(l) Site amenities (10 points maximum). A project shall receive up to 10 site amenity points for which it is eligible pursuant to Section 10325(c)(4)(A) of the CTCAC regulations, except that a maximum of three points shall be available to any project that meets the Resource Area criteria of Section 10325(c)(4)(A)11.