Assemblywoman Sharon Quirk-Silva (D – Fullerton) announced that Governor Gavin Newsom has signed AB 346 into law, addressing the critical need for affordable housing by maximizing the number of new affordable homes that can be produced through innovative measures and flexibility within the state’s Low-Income Housing Tax Credit program.
“AB 346 aims to optimize the impact of these funds and maximize the production of affordable homes by allowing the Tax Credit Allocation Committee (TCAC) to pair these state tax credits with either 4% or 9% federal credits, as conditions best require,” said Assemblywoman Quirk-Silva. “This bill does not impose any new taxes, as the amount of credits is predetermined in the budget each year. AB 346 is simply a more effective and impactful way for California to deploy its limited affordable housing resources.”
Almost all new affordable rental housing in California is financed through federal Low-Income Housing Tax Credits (LIHTC), which come in two forms: 9% and 4% credits. The 9% credits are allocated by TCAC, while developers are eligible for the 4% credits if they finance at least 50% of the development’s cost with tax-exempt bonds allocated by the California Debt Limit Allocation Committee. Initially paired with tax-exempt bonds and 4% federal tax credits in 2019, the intent was to utilize undersubscribed federal resources. However, over time, tax-exempt bonds and 4% credits have become oversubscribed, leading to unmet demand and uncertainty for bond applicants. AB 346 addresses this challenge by granting TCAC the authority to move credits to the unconstrained 9% federal tax credit program when tax-exempt bonds are oversubscribed.
“The Low-Income Housing Tax Credit is essential to the production and preservation of multifamily affordable rental homes in California,” said Matt Schwartz, President and CEO of California Housing Partnership. “AB 346 increases what corporate investors will pay for each dollar of state credit by roughly 7 cents and will result in an additional $42 million in private investment per year to help address our state’s affordable housing crisis without any additional cost to state taxpayers. AB 346 is a true win for California’s low-income renters.”
Assemblywoman Sharon Quirk-Silva represents the 67th Assembly District, which includes the Orange County communities of Anaheim, Buena Park, Cypress, Fullerton, and La Palma, as well as the Los Angeles County communities of Artesia, Cerritos, and Hawaiian Gardens.