Bill Text: CA AB1783 | 2019-2020 | Regular Session | Introduced

California Assembly Bill 1783 (Prior Session Legislation)

NOTE: There are more recent revisions of this legislation. Read Latest Draft

Bill Title: H-2A worker housing: state funding: streamlined approval process for agricultural employee housing development.

Spectrum: Partisan Bill (Democrat 10-0)

Status: (Passed) 2019-10-13 - Chaptered by Secretary of State - Chapter 866, Statutes of 2019. [AB1783 Detail]

Download: California-2019-AB1783-Introduced.html

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill

No. 1783

Introduced by Assembly Member Robert Rivas
(Coauthors: Senators Durazo and Wiener)

February 22, 2019

An act to amend Sections 12745, 12760, 12767, 12787, and 65582.1 of, and to add Section 12788 to, the Government Code, to amend Sections 17008, 17021, 17021.6, 17030, 17035, 17037, 17037.5, 50470, 50517.10, and 50715 of, and to add Sections 17021.8, 17030.10, and 50205 to, the Health and Safety Code, and to amend Sections 12206, 17058, and 23610.5 of the Revenue and Taxation Code, relating to agricultural employee housing.

LEGISLATIVE COUNSEL'S DIGEST

AB 1783, as introduced, Robert Rivas. H-2A worker housing: state funding: tax credits: streamlined approval process for agricultural employee housing development.

(1) Existing federal law governing immigration authorizes the importation of an alien as a nonimmigrant agricultural worker, known as an H-2A worker, if specified requirements are met, including that the employer furnish housing, as provided.

(A) Existing state law establishes various housing programs administered by the Department of Housing and Community Development, including the Joe Serna, Jr. Farmworker Housing Grant Program, pursuant to which the department provides, subject to availability of funds, grants and loans to specified entities or the construction or rehabilitation of housing for agricultural employees and their families or for the acquisition of manufactured housing, as provided. Existing state law, the California Community Services Block Grant Program, requires the department to administer the federal Community Services Block Grant funds to provide financial assistance for activities designed to have a measurable and potentially major impact on causes of poverty in a community or areas of a community where poverty is a particularly acute problem. Existing law authorizes this funding to assist programs that, among other things, meet the needs of migrant and seasonal farmworkers and their families, such as improved housing and sanitation, including the provision and maintenance of emergency and temporary housing and sanitation facilities.

This bill would prohibit the provision of state funding, as defined, for the purposes of planning, developing, or operating any housing used to comply with the federal law requirement to furnish housing to H-2A workers and would require an employer, as defined, or other recipient of state funding who utilizes state funding for these purposes to reimburse the state or state agency that provided the funding in an amount equal to the amount of that state funding expended for those purposes. The bill would exempt from these provisions any contract or other enforceable agreement pursuant to which the state or a state agency provides funding that was entered into prior to January 1, 2020. The bill would also make various conforming changes to other laws.

(B) Existing law establishes a low-income housing tax credit program pursuant to which the California Tax Credit Allocation Committee provides procedures and requirements for the allocation of state insurance, personal income, and corporation tax credit amounts among qualified low-income housing projects in modified conformity to federal law that have been allocated, or qualify for, a federal low-income housing tax credit, and for farmworker housing. Existing law allows a state credit, which is not dependent on receiving a federal low-income housing credit, of $500,000 per calendar year for projects to provide farmworker housing. Existing law additionally allows an amount of any unallocated or returned credits, as specified, until fully exhausted for projects to provide farmworker housing. Existing law defines “farmworker housing” to mean housing for agricultural workers that is available to, and occupied by, only farmworkers and their households.

This bill, under the law governing the taxation of insurers, the Personal Income Tax Law, and the Corporation Tax Law, would prohibit the above-described tax credits for any farmworker housing used to comply with the federal law requirement to furnish housing to H-2A workers.

(2) The Planning and Zoning Law requires that the housing element of a city’s or county’s general plan include, among other things, that the housing element of a city’s or county’s general plan include, among other things, an analysis of any special housing needs, including the needs of, among others, farmworkers. Existing law exempts certain housing developments from conditional use permits and requires those developments to be subject to certain streamlined approval processes, as specified.

Existing law, the Employee Housing Act, requires a person operating employee housing, as defined, to obtain a permit to operate that housing from the agency that enforces the act, which can either be the Department of Housing and Community Development or a city, county, or city and county that assumes responsibility for enforcing the act. The act generally reserves local use zone requirements to local governments except as provided, including requiring a specified streamlined approval process for the certain improvements related to employee housing for agricultural employees. The act also deems certain employee housing an agricultural land use and prohibits a local government from requiring a conditional use permit, zoning variance, or other zoning clearance for the employee housing, or from subjecting the employee housing to certain taxes or fees that are not required for other agricultural activity in that zone. A violation of the act is a misdemeanor.

This bill would expand the definition of employee housing under the act to include agricultural employee housing, as defined, and would require the department to be the enforcement agency for agricultural employee housing. The bill would provide that a tenant residing in agricultural employee housing has all rights applicable to a person residing in employee housing under existing provisions, including the California Fair Employment and Housing Act and specified provisions relating to tenant rights. The bill would require the department to establish and administer, as specified, an application and review process for certifying that a person is an affordable housing organization qualified to operate agricultural employee housing. The bill also would require the department to establish and maintain a roster of all certified affordable housing organizations. The bill would, as an exception to the provision reserving local use zone requirements to local governments, authorize a development proponent to submit an application for an agricultural employee housing development that is subject to an unspecified streamlined, ministerial approval process and that is not subject to a conditional use permit if certain conditions are satisfied, including that the agricultural employee housing will be maintained and operated by a qualified affordable housing organization that has been certified by the department and has been issued a permit to operate the agricultural employee housing from the department. The bill would also require, as a condition of that approval process, the qualified affordable housing organization and the landowner to obligate themselves and any successors in interest to maintain the affordability of the proposed agricultural employee housing, as specified, for not less than 55 years. If that organization does not continue to operate and maintain the housing for the time period agreed to satisfy that condition, the bill would require the landowner to select an alternative certified person within 90 days, and would subject the landowner to an unspecified administrative penalty if the landowner fails to do so. By increasing the duties of local officials with respect to the Employee Housing Act, and by expanding the scope of an existing crime with respect to violations of the Employee Housing Act, this bill would impose a state-mandated local program. The bill would make related findings and declarations, and would include findings that the changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities. The bill would make various conforming changes.

The California Environmental Quality Act (CEQA) requires a lead agency, as defined, to prepare, or cause to be prepared, and certify the completion of, an environmental impact report on a project that it proposes to carry out or approve that may have a significant effect on the environment or to adopt a negative declaration if it finds that the project will not have that effect. CEQA also requires a lead agency to prepare a mitigated negative declaration for a project that may have a significant effect on the environment if revisions in the project would avoid or mitigate that effect and there is no substantial evidence that the project, as revised, would have a significant effect on the environment. CEQA does not apply to the approval of ministerial projects.

Because the approval process established by the bill is streamlined and ministerial in nature, the approval of projects subject to this process are exempt from CEQA.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for specified reasons.

This bill would include a change in state statute that would result in a taxpayer paying a higher tax within the meaning of Section 3 of Article XIII A of the California Constitution, and thus would require for passage the approval of ²/₃ of the membership of each house of the Legislature.

Vote: 2/3 Appropriation: NO Fiscal Committee: YES Local Program: YES

The people of the State of California do enact as follows:

SECTION 1.

Section 12745 of the Government Code is amended to read:

12745.

(a) Eligible activities for which financial assistance may be obtained pursuant to this chapter shall be designed to have a measurable and potentially major impact on causes of poverty in the community or those areas of the community where poverty is a particularly acute problem. These activities shall be designed to assist low-income participants to do all the following:

(1) Secure and retain meaningful employment.

(2) Attain an adequate education.

(3) Make better use of available income.

(4) Obtain and maintain adequate housing and suitable living ~~environment.~~ environment subject to Section 12788.

(5) Obtain emergency assistance through loans or grants to meet immediate and urgent individual and family needs, including the need for health services, nutritious food, housing and employment-related ~~assistance.~~ assistance subject to Section 12788.

(6) Remove obstacles and solve problems that block the achievement of self-sufficiency.

(7) Achieve greater participation in the affairs of the community.

(8) Address the needs of youth in low-income communities.

(9) Make more effective use of other programs related to the purposes of this chapter.

(b) Additionally, activities shall be designed to do all of the following:

(1) Provide on an emergency basis for the provision of the supplies and services, nutritious foodstuffs, and related services, as may be necessary to counteract conditions of starvation and malnutrition among the poor.

(2) Coordinate and establish linkages between governmental and other social services programs to assure the effective delivery of those services to low-income individuals.

(3) Encourage the use of entities in the private sector of the community in efforts to ameliorate poverty in the community.

(c) Each eligible entity shall, through the local planning process, select and propose for funding the programs or projects that, in its judgment, will produce the maximum impact on its community.

(d) Entities eligible for funding under Article 9 (commencing with Section 12775) are limited purpose agencies that need not respond to the broad range of eligible activities but may provide specialized training, technical assistance and support services to enhance the effectiveness of community action programs, migrant and seasonal farmworker programs, and American Indian programs.

(e) The department may prescribe statewide priorities among eligible activities or strategies that shall be considered and addressed in the local planning process and described in the community action plan submitted to the state. Each eligible entity shall be authorized to set its own program priorities in conformance to its own determination of local needs.

(f) If no other entity in the community provides those services, eligible entities under Article 6 (commencing with Section 12750), Article 7 (commencing with Section 12765), or Article 8 (commencing with Section 12770) shall provide a minimum level of services to help the poor receive the benefits for which they are eligible under health, food, income, and housing assistance programs designed to meet the basic survival needs of the ~~poor.~~ poor subject to Section 12788. These services shall include, but shall not be limited to, all of the following:

(1) A service to help the poor complete the various required application forms, and, when necessary and possible, to help them gather verification of the contents of completed applications.

(2) A service to explain program requirements and client responsibilities in programs serving the poor.

(3) A service to provide transportation, when necessary and possible.

(4) A service that does all things necessary to make the programs accessible to the poor, so that they may become self-sufficient.

(g) Standards of effectiveness to be addressed and attained in setting goals and assessing accomplishments are:

(1) Strengthened community capabilities for planning and coordinating so as to insure that available assistance related to the elimination of poverty can be more responsive to local needs and conditions.

(2) Better organization of services related to the needs of the poor.

(3) Maximum feasible participation of the poor in the development and implementation of all programs and projects designed to serve the poor.

(4) Broadened resource base of programs directed to the elimination of poverty so as to include all elements of the community able to influence the quality and quantity of services to the poor.

(5) Greater use of new types of services and innovative approaches in attacking causes of poverty, so as to develop increasingly effective methods of employing available resources.

(6) Maximum employment opportunity, including opportunity for further occupational training and career development for residents of the area and members of the groups served.

(7) Those programmatic and fiscal standards set by the department through regulation that are necessary to enable the department to demonstrate the assurances and certifications it makes to the secretary in the state plan.

(h) In administering the California Community Services Block Grant Program, the department shall enforce all the programmatic and fiscal requirements and standards of effectiveness provided by this chapter, except that no eligible entity shall be determined to be out of compliance with programmatic or fiscal requirements established by the department until those requirements and standards are published for review and comment by the eligible entities and until eligible entities are afforded a reasonable opportunity to comply therewith.

SEC. 2.

Section 12760 of the Government Code is amended to read:

12760.

~~Community~~ Subject to Section 12788, community action agencies funded under this article shall coordinate their plans and activities with other eligible entities funded under Articles 7 (commencing with Section 12765) and 8 (commencing with Section 12770) that serve any part of their communities, so that funds are not used to duplicate particular services to the same beneficiaries and plans and policies affecting all grantees under this chapter are shaped, to the extent possible, so as to be equitable and beneficial to all community agencies and the populations they serve.

SEC. 3.

Section 12767 of the Government Code is amended to read:

12767.

~~Programs~~ Subject to Section 12788, programs assisted under this article may include projects or activities to do any of the following:

(a) Meet the immediate needs of migrant and seasonal farmworkers and their families, such as day care for children and elderly persons, education, health services, improved housing and sanitation, including the provision and maintenance of emergency and temporary housing and sanitation facilities, legal advice and representation, and consumer training and counseling, and assistance in processing applications for legalization and citizenship.

(b) Promote increased community acceptance of migrant and seasonal farmworkers and their families.

(c) Equip unskilled migrant and seasonal farmworkers and members of their families, as appropriate, through education, training, and developmental programs to meet the changing demands in agricultural employment brought about by technological advancement and economic exigencies, and to take advantage of opportunities available to improve their well-being and self-sufficiency by gaining regular or permanent employment or by participating in available federally assisted employment or training programs.

(d) Provide such other services as are permissible under Section 12745 with specific focus on the needs of migrant and seasonal farmworkers and their families.

SEC. 4.

Section 12787 of the Government Code is amended to read:

12787.

~~Nothing in~~ Except as provided in Section 12788, this chapter shall not be construed to prohibit an eligible entity under Article 6 (commencing with Section 12750), Article 7 (commencing with Section 12765), or Article 8 (commencing with Section 12770), from applying for state discretionary funds, provided that no discretionary funding received by the eligible entity shall be used to duplicate services funded pursuant to other provisions of this chapter.

SEC. 5.

Section 12788 is added to the Government Code, to read:

12788.

On and after January 1, 2020, housing funded pursuant to this chapter shall not include housing used to comply with the requirement under Section 1188(c)(4) of Title 8 of the United States Code to furnish housing to H-2A workers, as defined in Section 50205 of the Health and Safety Code. A person who receives funds made available pursuant to this chapter on or after January 1, 2020, and expends any of those funds for the purpose of planning, developing, or operating housing described in this article shall reimburse the department or other state agency that provided those funds, as provided in paragraph (2) of subdivision (b) of Section 50205 of the Health and Safety Code.

SEC. 6.

Section 65582.1 of the Government Code is amended to read:

65582.1.

The Legislature finds and declares that it has provided reforms and incentives to facilitate and expedite the construction of affordable housing. Those reforms and incentives can be found in the following provisions:

(a) Housing element law (Article 10.6 (commencing with Section 65580) of Chapter 3).

(b) Extension of statute of limitations in actions challenging the housing element and brought in support of affordable housing (subdivision (d) of Section 65009).

(d) Priority for affordable housing in the allocation of water and sewer hookups (Section 65589.7).

(e) Least cost zoning law (Section 65913.1).

(f) Density bonus law (Section 65915).

(g) Accessory dwelling units (Sections 65852.150 and 65852.2).

(h) By-right housing, in which certain multifamily housing are designated a permitted use (Section 65589.4).

(i) No-net-loss-in zoning density law limiting downzonings and density reductions (Section 65863).

(j) Requiring persons who sue to halt affordable housing to pay attorney fees (Section 65914) or post a bond (Section 529.2 of the Code of Civil Procedure).

(k) Reduced time for action on affordable housing applications under the approval of development permits process (Article 5 (commencing with Section 65950) of Chapter 4.5).

(l) Limiting moratoriums on multifamily housing (Section 65858).

(m) Prohibiting discrimination against affordable housing (Section 65008).

(n) California Fair Employment and Housing Act (Part 2.8 (commencing with Section 12900) of Division 3).

(o) Community redevelopment law (Part 1 (commencing with Section 33000) of Division 24 of the Health and Safety Code, and in particular Sections 33334.2 and 33413).

(p) Streamlining housing approvals during a housing shortage (Section 65913.4).

(q) Housing sustainability districts (Chapter 11 (commencing with Section 66200)).

(r) Streamlining agricultural employee housing development approvals (Section 17021.8 of the Health and Safety Code).

SEC. 7.

Section 17008 of the Health and Safety Code is amended to read:

17008.

(a) “Employee housing,” as used in this part, means any portion of any housing accommodation, or property upon which a housing accommodation is located, if all of the following factors exist:

(1) The accommodations consist of any living quarters, dwelling, boardinghouse, tent, bunkhouse, maintenance-of-way car, mobilehome, manufactured home, recreational vehicle, travel trailer, or other housing accommodations, maintained in one or more buildings or one or more sites, and the premises upon which they are situated or the area set aside and provided for parking of mobilehomes or camping of five or more employees by the employer.

(2) The accommodations are maintained in connection with any work or place where work is being performed, whether or not rent is involved.

(b) (1) ~~“Employee~~ Except as provided in paragraphs (2) and (3), “employee housing,” as used in this part, also includes any portion of any housing accommodation or property upon which housing accommodations are located, if all of the following factors exist:

(A) The housing accommodations or property are located in any rural area, as defined by Section 50101.

(B) The housing accommodations or property are not maintained in connection with any work or workplace.

(C) The housing accommodations or property are provided by someone other than an agricultural employer, as defined in Section 1140.4 of the Labor Code.

(D) The housing accommodations or property are used by five or more agricultural employees of any agricultural employer or employers for any of the following:

(i) Temporary or seasonal residency.

(ii) Permanent residency, if the housing accommodation is a mobilehome, manufactured home, travel trailer, or recreational vehicle.

(iii) Permanent residency, if the housing accommodation is subject to the State Housing Law and is more than 30 years old and at least 51 percent of the structures in the housing accommodation, or 51 percent of the accommodation if not separated into units, are occupied by agricultural employees.

~~(E)~~

(2) “Employee housing” does not include a hotel, motel, inn, tourist hotel, multifamily dwelling, or single-family house if all of the following factors exist:

~~(i)~~

(A) The housing is offered and rented to nonagricultural employees on the same terms that it is offered and rented to agricultural employees.

~~(ii)~~

(B) None of the occupants of the housing are employed by the owner or property manager of the housing or any party with an interest in the housing.

~~(iii)~~

(C) None of the occupants of the housing have rent deducted from their wages.

~~(iv)~~

(D) The owner or property manager of the housing is not an agricultural employer as defined in Section 1140.4 of the Labor Code, or an agent, as it relates to the housing in question, of an agricultural employer.

~~(v)~~

(E) Negotiation of the terms of occupancy of the housing is conducted between each occupant and the owner of the housing or between each occupant and a manager of the property who is employed by the owner of the housing.

~~(vi)~~

(F) The occupants are not required to live in the housing as a condition of employment or of securing employment and the occupants are not referred to live in the housing by the employer of the occupants, the agent of the employer of the occupants, or an agricultural employer as defined in Section 1140.4 of the Labor Code.

~~(vii)~~

(G) The housing accommodation was not at any time ~~prior to~~ before January 1, 1984, employee housing as defined in subdivision (a).

~~(2)~~

(3) “Employee housing,” as defined by this subdivision, does not include a hotel, motel, inn, tourist hotel, or permanent housing as defined by subdivision (d) of Section 17010, ~~which~~ that has not been maintained, ~~prior to~~ before January 1, 1984, or is not maintained on or after that date, as employee housing, as defined in subdivision (a).

~~(3)~~

(c) If at any time ~~prior to~~ before January 1, 1984, a housing accommodation was employee housing, as defined in subdivision (a), and on or after January 1, 1984, was employee housing, as defined in ~~this subdivision,~~ subdivision (b), the owner and operator shall comply with all requirements of this part. The owner and operator of any other housing accommodation which is employee housing pursuant to ~~this~~ subdivision (b) shall be subject to the licensing and inspection provisions of this part and shall comply with all other provisions of this part, except that if any portion of the housing accommodation is held out for rent or lease to the general public, the construction and physical maintenance standards of the housing accommodation shall be consistent with the applicable provisions of the State Housing Law, Part 1.5 (commencing with Section 17910), the ~~Mobilehome-Manufactured Homes~~ Manufactured Housing Act, Part 2 (commencing with Section 18000); or the Mobilehome Parks Act, Part 2.1 (commencing with Section 18200). The owner or operator of the employee housing shall designate all units or spaces which are employee housing, as defined in this subdivision, for the purpose of inspection and licensing by the enforcement agency, subject to confirmation by the enforcement agency, based on all relevant evidence.

~~(c)~~

(d) “Employee housing” does not include employee community housing, as defined by Section 17005.5, ~~which~~ that has been granted an exemption pursuant to Section 17031.3; housing, and the premises upon which it is situated, owned by a public entity; or privately owned housing, including ownership by a nonprofit entity, and the premises upon which it is situated, financed with public funds equaling 50 percent or more of the original development or purchase cost.

~~(d)~~

(e) “Employee housing” means the same as “labor camp,” as that term may be used in this or other codes and, notwithstanding any local ordinance to the contrary in a general law or charter city, county, or city and county, shall be deemed a residential use if it exists in structures that are single-family houses or apartment houses as those terms are used in the State Housing Law (Part 1.5 (commencing with Section 17910)).

(f) (1) (A) “Employee housing,” as used in this part, also includes agricultural employee housing, as defined in paragraph (B).
(B) “Agricultural employee housing” means housing occupied by an employee of an agricultural employer, as defined in Section 1140.4 of the Labor Code, or by a farm labor contractor, as defined in Section 1682 of the Labor Code.
(2) A tenant residing in agricultural employee housing has all rights applicable to a person residing in employee housing, including the following:
(A) The right to file a verified complaint with the Department of Fair Employment and Housing alleging a violation of housing discrimination, or to assert any other right, under the California Fair Employment and Housing Act (Part 2.8 (commencing with Section 12900) of Division 3 of Title 2 of the Government Code).
(B) Any protections for tenants or lessees under the Civil Code or the Labor Code, except as otherwise provided in Section 17031.6.
(C) Any protection or right under the Alatorre-Zenovich-Dunlap-Berman Agricultural Labor Relations Act of 1975 (Part 3.5 (commencing with Section 1140) of Division 2 of the Labor Code).

SEC. 8.

Section 17021 of the Health and Safety Code is amended to read:

17021.

(a) Except as provided in Sections ~~17021.5 and~~ 17021.5, 17021.6, and 17021.8, local use zone requirements, local fire zones, property line, source of water supply and method of sewage disposal requirements are hereby specifically and entirely reserved to the local jurisdictions.

(b) Notwithstanding any other ~~provision of~~ law, with respect to a building permit, grading permit, or other approval from a city or county building department for the rehabilitation of real property improvements that are or will be agricultural employee ~~housing for agricultural employees,~~ housing, or from a city or county health department for the operation, construction, or repair of a water system or waste disposal system servicing agricultural employee ~~housing for agricultural employees,~~ housing, all of the following processing requirements shall apply:

(1) The local building or health department shall have up to 60 calendar days to approve or deny a complete application or permit request accompanied by applicable fees, or a shorter time period if required by the Permit Streamlining Act (Chapter 4.5 (commencing with Section 65920) of Division 1 of Title 7 of the Government Code). An The local building or health department may deny an application or permit request ~~may be denied~~ on procedural grounds only if the denial occurs within 30 calendar days and the denial includes an itemization of the procedural defects. An The local building or health department may deny an application or permit request ~~may be denied~~ on substantive grounds if the denial includes an itemization of all substantive defects.

(2) If the local building or health department does not approve or deny the application or permit request ~~is not approved or denied by the local building or health department~~ within the period prescribed by paragraph (1), then the Department of Housing and Community Development may approve the application or permit request if it determines that the plans are consistent with all applicable building codes and health and safety requirements. At that time, the applicant may initiate any work consistent with the application or permit approved pursuant to this subdivision. Upon completion of the work, any other state or local agency shall accept the improvements as if ~~they had been approved by~~ the local building or health ~~department.~~ department had approved them. However, if that other local agency identifies any defects that would have resulted in that agency’s disapproval of the improvements or plans ~~thereto, those defects may be identified by the agency and shall be corrected by the applicant.~~ for improvement, the agency may identify those defects and the applicant shall correct them. The local building or health department shall inspect the plans and improvements prior to and during rehabilitation and issue a certificate of completion if the work is consistent with the plans and all applicable building codes and health and safety requirements.

(c) Nothing in this section shall be construed to exempt an application or permit request from complying with the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code).

~~(d) For purposes of this section, “agricultural employee” has the same meaning specified in subdivision (b) of Section 1140.4 of the Labor Code.~~
~~(e)~~

(d) The Department of Housing and Community Development may recover from a local building or health department costs incurred to review an application or permit request in compliance with paragraph (2) of subdivision (b). The amount recoverable may not exceed the applicable plan check fee published by the International Conference of Building Officials.

SEC. 9.

Section 17021.6 of the Health and Safety Code is amended to read:

17021.6.

(a) The owner of any employee housing who has qualified or intends to qualify for a permit to operate pursuant to this part may invoke this section.

(b) Any employee housing consisting of no more than 36 beds in a group quarters or 12 units or spaces designed for use by a single family or household shall be deemed an agricultural land use for the purposes of this section. For the purpose of all local ordinances, employee housing shall not be deemed a use that implies that the employee housing is an activity that differs in any other way from an agricultural use. No conditional use permit, zoning variance, or other zoning clearance shall be required of this employee housing that is not required of any other agricultural activity in the same zone. The permitted occupancy in employee housing in a zone allowing agricultural uses shall include agricultural employees who do not work on the property where the employee housing is located.

(c) Except as otherwise provided in this part, employee housing consisting of no more than 36 beds in a group quarters or 12 units or spaces designed for use by a single family or household shall not be subject to any business taxes, local registration fees, use permit fees, or other fees to which other agricultural activities in the same zone are not likewise subject. This subdivision does not forbid the imposition of local property taxes, fees for water services and garbage collection, fees for normal inspections, local bond assessments, and other fees, charges, and assessments to which other agricultural activities in the same zone are likewise subject. Neither the State Fire Marshal nor any local public entity shall charge any fee to the owner, operator, or any resident for enforcing fire inspection regulation pursuant to state law or regulations or local ordinance, with respect to employee housing consisting of no more than 36 beds in a group quarters or 12 units or spaces designed for use by a single family or household.

(d) For the purposes of any contract, deed, or covenant for the transfer of real property, employee housing consisting of no more than 36 beds in a group quarters or 12 units or spaces designed for use by a single family or household shall be considered an agricultural use of property, notwithstanding any disclaimers to the contrary. For purposes of this section, “employee housing” includes employee housing defined in ~~subdivision (b)~~ subdivisions (b) and (c) of Section 17008, even if the housing accommodations or property are not located in a rural area, as defined by Section 50101.

(e) The Legislature hereby declares that it is the policy of this state that each county and city shall permit and encourage the development and use of sufficient numbers and types of employee housing facilities as are commensurate with local need. This section shall apply equally to any charter city, general law city, county, city and county, district, and any other local public entity.

(f) If any owner who invokes the provisions of this section fails to maintain a permit to operate pursuant to this part throughout the first 10 consecutive years following the issuance of the original certificate of occupancy, both of the following shall occur:

(1) The enforcement agency shall notify the appropriate local government entity.

(2) The public agency that has waived any taxes, fees, assessments, or charges for employee housing pursuant to this section may recover the amount of those taxes, fees, assessments, or charges from the landowner, less 10 percent of that amount for each year that a valid permit has been maintained.

(g) Subdivision (f) shall not apply to an owner of any prospective, planned, or unfinished employee housing facility who has applied to the appropriate state and local public entities for a permit to construct or operate pursuant to this part prior to January 1, 1996.

SEC. 10.

Section 17021.8 is added to the Health and Safety Code, to read:

17021.8.

(a) A development proponent may submit an application for a development that is subject to a streamlined, ministerial approval process and is not subject to a conditional use permit if all of the following is satisfied:

(1) The development is located on land zoned for agricultural uses.

(2) The development is an agricultural employee housing development that satisfies both of the following:

(A) The agricultural employee housing does not contain dormitory style housing.

(B) The agricultural employee housing will be maintained and operated by a qualified affordable housing organization that has been certified pursuant to Section 17030.10 and that has been issued a permit pursuant to Section 17030. The development proponent shall submit proof of issuance of the qualified affordable housing organization’s permit.

(3) The qualified affordable housing organization and the landowner shall obligate themselves and any successors in interest to maintain the affordability of the proposed agricultural employee housing for agricultural employees for not less than 55 years.

(b) The Legislature hereby declares that it is the policy of this state that each county and city shall permit and encourage the development and use of sufficient numbers and types of agricultural employee housing as are commensurate with local need. The Legislature further finds and declares that this section addresses a matter of statewide concern rather than a municipal affair as that term is used in Section 5 of Article XI of the California Constitution. Therefore, this section applies to all cities, including charter cities.

SEC. 11.

Section 17030 of the Health and Safety Code is amended to read:

17030.

(a) ~~Every~~ A person operating employee housing shall obtain a permit to operate that employee housing from the enforcement agency, unless otherwise exempted by this part. It shall be unlawful for ~~any~~ a person to operate employee housing without a valid permit to operate issued by the enforcement agency, as required by this part. Permits to operate shall be issued annually by the enforcement agency, except as provided in this section and Section 17030.5.

(b) Employee housing on a dairy farm which meets the requirements of Section 32505 of the Food and Agricultural Code, consisting only of permanent single-family employee housing, may be exempted from the requirement of obtaining a permit to operate employee housing, as provided in Section 17031. This housing shall meet the requirements of the State Housing Law before an exemption is granted.

(c) A permit to operate shall be valid from the date of issuance through December 31 of the year of issuance, or December 31 of the year designated by the enforcement agency for permanent single-family employee housing. Permits to operate employee housing may prescribe conditions on the use or occupancy of the employee housing.

(d) The Department of Housing and Community Development shall be the enforcement agency for ~~any~~ employee housing owned or operated by a railroad corporation.

(e) The Department of Housing and Community Development shall be the enforcement agency for agricultural employee housing.

SEC. 12.

Section 17030.10 is added to the Health and Safety Code, to read:

17030.10.

(a) The department shall establish an application and review process for certifying that a person is an affordable housing organization qualified to operate agricultural employee housing.

(b) A person desiring certification as a qualified affordable housing organization may, in the form and manner prescribed by the department, submit an application to the department. The department shall review an application so submitted, and shall certify the person as a qualified affordable housing organization if the following requirements are satisfied:

(1) The applicant has demonstrated relevant prior experience in California and current capacity, as capable of operating the housing and related facilities for its remaining useful life, either by itself or through a management agent.

(2) The applicant is one of the following:

(A) A not-for-profit corporation organized pursuant to Division 2 (commencing with Section 5000) of Title 1 of the Corporations Code that satisfies both of the following:

(i) The not-for-profit corporation has as its principal purpose the ownership, development, or management of housing or community development projects for persons and families of low or moderate income and very low income.

(ii) The not-for-profit corporation has a broadly representative board, a majority of whose members are community based and have a proven track record of local community service.

(B) A local public housing agency. For purposes of this subdivision, “local public housing agency” means a housing authority, redevelopment agency, or any other agency of a city, county, or city and county, whether general law or chartered, that is authorized to own, develop, or manage housing or community development projects for persons and families of low or moderate income and very low income.

(C) A not-for-profit, charitable corporation organized on a multicounty, state, or multistate basis that satisfies both of the following:

(i) The charitable corporation has as its principal purpose the ownership, development, or management of housing or community development projects for persons and families of low or moderate income and very low income.

(ii) The charitable corporation owns or operates at least three comparable rent- and income-restricted affordable rental properties governed under a regulatory agreement with a department or agency of the State of California or the United States, either directly or by serving as the managing general partner of limited partnerships or managing member of limited liability corporations.

(D) A multicounty, state, or multistate agency that satisfies both of the following:

(i) The agency is authorized to own, develop, or manage housing or community development projects for persons and families of low or moderate income and very low income.

(ii) The agency owns and operates at least three comparable rent- and income-restricted affordable rental properties governed under a regulatory agreement with a department or agency of the State of California or the United States, either directly or by serving as the managing general partner of limited partnerships or managing member of limited liability corporations.

(E) Any other organization or entity that the department determines, by regulation, is sufficiently similar to any of the organizations described in this paragraph.

(3) Except for local public housing agencies with elected legislative bodies, the applicant does not have a member among its officers or directorate with a financial interest in an agricultural employer, as defined in Section 1140.4 of the Labor Code, or a farm labor contractor, as defined in Section 1682 of the Labor Code.

SEC. 13.

Section 17035 of the Health and Safety Code is amended to read:

17035.

(a) The department shall establish and maintain a roster of all employee housing having a valid permit to operate.

(b) The department shall establish and maintain a roster of all affordable housing organizations certified pursuant to Section 17030.10.

SEC. 14.

Section 17037 of the Health and Safety Code is amended to read:

17037.

~~Every~~ A person, or the agent or officer thereof, constructing, operating, or maintaining employee housing shall comply with the requirements of this part, with building standards published in the State Building Standards Code relating to employee housing, and with the other regulations adopted pursuant to this part.

(a) ~~Any~~ A person operating or maintaining employee housing without first having obtained a permit to operate from the enforcement agency shall pay double the fees prescribed for the permit to operate the employee housing.

(b) ~~Any~~ A person found for a second or subsequent time within a five-year period to be operating or maintaining employee housing without first having obtained a permit to operate from the enforcement agency shall pay 10 times the fees prescribed for the permit to operate the employee housing. The two or more violations referenced in this paragraph may be with regard either to the same enforcement agency or to two or more different enforcement agencies.

(c) Notwithstanding Section 17061, a landowner shall be subject to an administrative penalty issued by the department if the landowner fails to select an alternative certified person to operate and maintain the agricultural employee housing development as required by subdivision (c) of Section 17037.5.

SEC. 15.

Section 17037.5 of the Health and Safety Code is amended to read:

17037.5.

(a) ~~Any~~ A person who ceases to operate or maintain employee housing that is subject to the permit requirement pursuant to this part shall ~~be required to annually~~ complete and submit annually a Certificate of Non-Operation to the enforcement agency. The Certificate of Non-Operation shall be submitted for two years following the discontinuation of the use of any area on the property as employee housing. The Certificate of Non-Operation shall attest under penalty of perjury that the employee housing has been destroyed, or is no longer owned or operated, or has not been and shall not be occupied by five or more employees during the calendar year.

(b) The Certificate of Non-Operation shall include the owner’s name and address, the operator’s name and address, the employee housing name and location, the maximum number of employees who have occupied or shall occupy the employee housing during the calendar year, and any other information considered relevant by the enforcement agency. The Certificate of Non-Operation shall be completed and submitted to the enforcement agency no later than 30 calendar days after the enforcement agency provides the form to the owner or operator.

(c) If a certified person’s permit required by Section 17030 expires or the certified person is otherwise unable or unwilling to continue to operate and maintain an agricultural employee housing for the agreed time period as required by Section 17021.8, the landowner, within 90 days of the certified person’s ceasing operation and maintenance of the agricultural employee housing, shall select an alternative certified affordable housing organization to operate and maintain the agricultural employee housing.

SEC. 16.

Section 50205 is added to the Health and Safety Code, to read:

50205.

(a) As used in this section:

(1) “Employer” means a person who has petitioned, or will petition, to import an H-2A worker pursuant to Section 1188 of Title 8 of the United States Code to work on the employer’s agricultural land.

(2) “H-2A worker” means a nonimmigrant alien as described in Section 1101(a)(15)(H)(ii)(a) of Title 8 of the United States Code employed to work for an employer.

(3) “State funding” means any provision of moneys or other financial assistance provided by the state or a state agency, including, but not limited to, grants, loans, and write-downs of land costs, but does not include any allocation of federal or state low-income housing tax credits pursuant to Chapter 3.6 (commencing with Section 50199.4) of this part or Sections 12206, 17058, or 23610.5 of the Revenue and Taxation Code.

(b) (1) Notwithstanding any other law and subject to paragraph (2), state funding shall not be provided for the purposes of planning, developing, or operating any housing used to comply with the requirement under Section 1188(c)(4) of Title 8 of the United States Code to furnish housing to H-2A workers.

(2) Any employer or other recipient of state funding who utilizes state funding for the purposes described in paragraph (1) shall reimburse the state or state agency that provided the funding in an amount equal to the amount of that state funding expended for those purposes.

(3) This subdivision shall not apply to any contract or other enforceable agreement pursuant to which the state or a state agency provides state funding that was entered into prior to January 1, 2020.

SEC. 17.

Section 50470 of the Health and Safety Code is amended to read:

50470.

(a) (1) There is hereby created in the State Treasury the Building Homes and Jobs Trust Fund. All interest or other increments resulting from the investment of moneys in the fund shall be deposited in the fund, notwithstanding Section 16305.7 of the Government Code.

(2) Moneys in the Building Homes and Jobs Trust Fund shall not be subject to transfer to any other fund pursuant to any provision of Part 2 (commencing with Section 16300) of Division 4 of Title 2 of the Government Code, except to the Surplus Money Investment Fund.

(b) Moneys in the Building Homes and Jobs Trust Fund shall be appropriated either through the annual Budget Act, or as provided in this subdivision, in accordance with the following:

(1) Moneys collected on and after January 1, 2018, and until December 31, 2018, shall, upon appropriation by the Legislature, be allocated as follows:

(A) Fifty percent of deposits into the fund shall be made available for local governments to update planning documents and zoning ordinances in order to streamline housing production, including, but not limited to, general plans, community plans, specific plans, sustainable communities strategies, and local coastal programs. Eligible uses also include new environmental analyses that eliminate the need for project-specific review and local process updates that improve and expedite local permitting.

(i) Five percent of the funds specified by this subparagraph shall be available for technical assistance to jurisdictions updating specified planning documents. Technical assistance shall be provided by the department and the Governor’s Office of Planning and Research.

(ii) The funds to be allocated pursuant to this subparagraph shall be held by the department until a local government submits a request for use. The request shall include a description of the proposed use of the funds in the interest of accelerating housing production. The proposed use of these funds shall be included in the local government’s funding plan and annual reports pursuant to subclauses (II) and (III) of clause (ii) of subparagraph (B) of paragraph (2). Any of these funds not allocated by the department within the first two years that those funds are available shall be made available by the department for the Multifamily Housing Program (Chapter 6.7 (commencing with Section 50675)).

(B) Fifty percent of deposits into the fund shall be made available to the department to assist persons experiencing or at risk of homelessness, including, but not limited to, providing rapid rehousing, rental assistance, navigation centers, and the new construction, rehabilitation, and preservation of permanent and transitional rental housing.

(C) The department shall ensure geographic equity in the distribution and expenditure of funds allocated pursuant to this paragraph.

(2) Moneys collected on and after January 1, 2019, shall be allocated as follows:

(A) Twenty percent of all moneys in the fund shall, upon appropriation by the Legislature, be expended for affordable owner-occupied workforce housing.

(B) (i) Seventy percent of moneys deposited in the fund shall, upon appropriation by the Legislature, be made available to local governments as follows:

(I) Ninety percent of the moneys specified in this subparagraph shall be allocated based on the formula specified in Section 5306 of Title 42 of the United States Code, in accordance with the distribution of funds pursuant to that formula for the federal Fiscal Year 2017, except that the portion allocated to nonentitlement areas pursuant to that section shall be distributed through a competitive grant program, administered by the department, as follows:

(ia) The department shall award priority points to a county that has a population of 200,000 or less within the unincorporated areas of the county, to a local government that did not receive an award based on the formula specified in Section 5306 of Title 42 of the United States Code in 2016, and to a local government that pledges to use the money awarded pursuant to a competitive grant under this subclause to assist persons experiencing or at risk of homelessness, including, but not limited to, providing rapid rehousing, rental assistance, navigation centers, and the new construction, rehabilitation, and preservation of permanent and transitional rental housing.

(ib) Moneys awarded to a local government pursuant to the competitive grant program shall be used for the purposes specified in subparagraph (D).

(II) The remaining 10 percent of the moneys specified in this subparagraph shall be allocated equitably among local jurisdictions that are nonentitlement areas pursuant to the formula specified in Section 5306 of Title 42 of the United States Code for federal Fiscal Year 2017.

(ii) To receive moneys pursuant to this subparagraph, local governments shall document minimum standards including the following:

(I) Submit a plan to the department detailing the manner in which allocated funds will be used by the local government in a manner consistent with this paragraph and to meet the local government’s unmet share of the regional housing needs allocation.

(II) Have a compliant housing element with the state and submit a current annual report pursuant to Section 65400 of the Government Code.

(III) Submit an annual report to the department that provides ongoing tracking of the uses and expenditures of any allocated funds.

(IV) Funds may be expended for the uses listed in subparagraph (D). Two or more local governments that receive an allocation pursuant to this subparagraph may expend those moneys on a joint project that is an authorized use under subparagraph (D).

(V) Prioritize investments that increase the supply of housing to households that are at or below 60 percent of area median income, adjusted for household size.

(VI) If a local government does not have a documented plan to expend the moneys allocated to it pursuant to this subparagraph within five years of that allocation, those moneys shall be exempt from the allocation requirements in this paragraph and shall revert to, and be paid and deposited in, the Housing Rehabilitation Loan Fund established pursuant to Section 50661 to be used for the Multifamily Housing Program (Chapter 6.7 (commencing with Section 50675)) or for technical assistance for local governments.

(VII) A local government may petition the department to return any moneys allocated to it pursuant to this subparagraph. Any moneys returned pursuant to this clause shall be used for the Multifamily Housing Program (Chapter 6.7 (commencing with Section 50675)).

(i) Five percent of the moneys deposited in the fund shall, upon appropriation by the Legislature, be used for state incentive programs, including loans and grants administered by the department. If the department receives insufficient funding applications for incentive programs financed pursuant to this clause, the department shall make those funds available for the Multifamily Housing Program (Chapter 6.7 (commencing with Section 50675)).

(ii) ~~Ten~~ (I) Subject to subclause (II), 10 percent of the moneys deposited in the fund shall, upon appropriation by the Legislature, be used to address affordable homeownership and rental housing opportunities for agricultural workers and their families.

(II) On and after January 1, 2020, housing funded pursuant to this clause shall not include housing used to comply with the requirement under Section 1188(c)(4) of Title 8 of the United States Code to furnish housing to H-2A workers, as defined in Section 50205. A person who receives funds made available pursuant to this clause on or after January 1, 2020, and expends any of those funds for the purpose of planning, developing, or operating housing described in this subclause shall reimburse the department or other state agency that provided those funds, as provided in paragraph (2) of subdivision (b) of Section 50205.

(iii) Fifteen percent of the moneys deposited in the fund shall, notwithstanding any other provision of this section or Section 13340 of the Government Code, be continuously appropriated to the California Housing Finance Agency for the purpose of creating mixed income multifamily residential housing for lower to moderate income households pursuant to Chapter 6.7 (commencing with Section 51325) of Part 3.

(D) The moneys in the fund allocated to local governments may be expended for the following purposes:

(i) The predevelopment, development, acquisition, rehabilitation, and preservation of multifamily, residential live-work, rental housing that is affordable to extremely low, very low, low-, and moderate-income households, including necessary operating subsidies.

(ii) Affordable rental and ownership housing that meets the needs of a growing workforce earning up to 120 percent of area median income, or 150 percent of area median income in high-cost areas.

(iii) Matching portions of funds placed into local or regional housing trust funds.

(iv) Matching portions of funds available through the Low and Moderate Income Housing Asset Fund pursuant to subdivision (d) of Section 34176 of the Health and Safety Code.

(v) Capitalized reserves for services connected to the creation of new permanent supportive housing, including, but not limited to, developments funded through the Veterans Housing and Homelessness Prevention Bond Act of 2014.

(vi) Assisting persons who are experiencing or at risk of homelessness, including providing rapid rehousing, rental assistance, navigation centers, emergency shelters, and the new construction, rehabilitation, and preservation of permanent and transitional housing.

(vii) Accessibility modifications.

(viii) Efforts to acquire and rehabilitate foreclosed or vacant homes.

(ix) Homeownership opportunities, including, but not limited to, downpayment assistance.

(x) Fiscal incentives or matching funds to local agencies that approve new housing for extremely low, very low, low-, and moderate-income households.

(3) A state or local entity that receives an appropriation or allocation pursuant to this chapter shall use no more than 5 percent of that appropriation or allocation for costs related to the administration of the housing program for which the appropriation or allocation was made.

(1) Any moneys appropriated and made available by the Legislature for purposes of the fund.

(2) Any other moneys that may be made available to the department for the purposes of the fund from any other source or sources.

(d) In consultation with stakeholders, the department may adopt guidelines to implement this section, including to determine allocation methodologies. Any guideline, rule, policy, or standard of general application employed by the department in implementing this chapter shall not be subject to the requirements of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).

SEC. 18.

Section 50517.10 of the Health and Safety Code is amended to read:

50517.10.

(a) In addition to the purposes specified in subdivision (a) of Section ~~50517.5,~~ 50517.5 and except as otherwise provided in subdivision (b), the department may make grants and loans under the Joe Serna, Jr. Farmworker Housing Grant Program to local public entities and nonprofit corporations in order to establish capitalized operating reserves for short-term occupancy housing for migrant farmworker households, purchase land for, and construct, housing structures for short-term occupancy by migrant farmworker households, lease or purchase existing structures for short-term occupancy by migrant farmworker households, and, where the department determines that extraordinary or emergency circumstances exist, directly rent or lease housing for short-term occupancy by migrant farmworker households.

(b) (1) Notwithstanding any other provision of this chapter, except as provided in paragraph (2), the department shall not make grants or loans under the Joe Serna, Jr. Farmworker Housing Grant Program on or after January 1, 2020, for the purpose of planning, developing, or operating housing used to comply with the requirement under Section 1188(c)(4) of Title 8 of the United States Code to furnish housing to H-2A workers, as provided in subdivision (b) of Section 50205. A person who receives any grant or loan under the Joe Serna, Jr. Farmworker Housing Grant Program on or after January 1, 2020, and expends any of those funds for any purpose described in this subdivision shall reimburse the department as provided in paragraph (2) of subdivision (b) of Section 50205.
(2) This subdivision shall not apply to any contract entered into or any grant or loan provided pursuant to the Joe Serna, Jr. Farmworker Housing Grant Program prior to January 1, 2020.

SEC. 19.

Section 50715 of the Health and Safety Code is amended to read:

50715.

(a) Housing operated pursuant to this chapter may be used for the purposes set forth in Chapter 11.5 (commencing with Section ~~50800) ,~~ 50800), provided that no funds appropriated for the purposes of this chapter shall be used for the operation or administration of this housing as emergency shelter pursuant to Chapter 11.5, and provided further that this housing may be made available as emergency shelter pursuant to Chapter 11.5 only during the months of November to March, inclusive.

(b) (1) Notwithstanding any other provision of this chapter, except as provided in paragraph (2), housing operated pursuant to this chapter shall not include any housing used to comply with the requirement under Section 1188(c)(4) of Title 8 of the United States Code to furnish housing to H-2A workers, as defined in Section 50205. The department or a city, county, or other local agency shall not enter into any contract pursuant to Section 50710 or 50712, respectively, or provide any financial assistance under this chapter on or after January 1, 2020. A person who receives financial assistance under this chapter on or after January 1, 2020, and expends any of those funds for any purpose described in this subdivision shall reimburse the department as provided in paragraph (2) of subdivision (b) of Section 50205.
(2) This subdivision shall not apply to any contract entered into or any financial assistance provided pursuant to this chapter prior to January 1, 2020.

SEC. 20.

Section 12206 of the Revenue and Taxation Code is amended to read:

12206.

(a) (1) There shall be allowed as a credit against the “tax,” described by Section 12201, a state low-income housing tax credit in an amount equal to the amount determined in subdivision (c), computed in accordance with Section 42 of the Internal Revenue Code, relating to low-income housing credit, except as otherwise provided in this section.

(2) “Taxpayer,” for purposes of this section, means the sole owner in the case of a “C” corporation, the partners in the case of a partnership, and the shareholders in the case of an “S” corporation.

(3) “Housing sponsor,” for purposes of this section, means the sole owner in the case of a “C” corporation, the partnership in the case of a partnership, and the “S” corporation in the case of an “S” corporation.

(b) (1) The amount of the credit allocated to any housing sponsor shall be authorized by the California Tax Credit Allocation Committee, or any successor thereof, based on a project’s need for the credit for economic feasibility in accordance with the requirements of this section.

(A) Except for projects to provide farmworker housing, as defined in subdivision (h) of Section 50199.7 of the Health and Safety Code, that are allocated credits solely under the set-aside described in subdivision (c) of Section 50199.20 of the Health and Safety Code, the low-income housing project shall be located in California and shall meet either of the following requirements:

(i) The project’s housing sponsor has been allocated by the California Tax Credit Allocation Committee a credit for federal income tax purposes under Section 42 of the Internal Revenue Code, relating to low-income housing credit.

(ii) It qualifies for a credit under Section 42(h)(4)(B) of the Internal Revenue Code, relating to special rule where 50 percent or more of building is financed with tax-exempt bonds subject to volume cap.

(B) The California Tax Credit Allocation Committee shall not require fees for the credit under this section in addition to those fees required for applications for the tax credit pursuant to Section 42 of the Internal Revenue Code, relating to low-income housing credit. The committee may require a fee if the application for the credit under this section is submitted in a calendar year after the year the application is submitted for the federal tax credit.

(C) (i) For a project that receives a preliminary reservation of the state low-income housing tax credit, allowed pursuant to subdivision (a), on or after January 1, 2009, and before January 1, 2020, the credit shall be allocated to the partners of a partnership owning the project in accordance with the partnership agreement, regardless of how the federal low-income housing tax credit with respect to the project is allocated to the partners, or whether the allocation of the credit under the terms of the agreement has substantial economic effect, within the meaning of Section 704(b) of the Internal Revenue Code, relating to determination of distributive share.

(ii) This subparagraph shall not apply to a project that receives a preliminary reservation of state low-income housing tax credits under the set-aside described in subdivision (c) of Section 50199.20 of the Health and Safety Code unless the project also receives a preliminary reservation of federal low-income housing tax credits.

(2) (A) The California Tax Credit Allocation Committee shall certify to the housing sponsor the amount of tax credit under this section allocated to the housing sponsor for each credit period.

(B) In the case of a partnership or an “S” corporation, the housing sponsor shall provide a copy of the California Tax Credit Allocation Committee certification to the taxpayer.

(C) (1) The taxpayer shall attach a copy of the certification to any return upon which a tax credit is claimed under this section.

(2) In the case of a failure to attach a copy of the certification for the year to the return in which a tax credit is claimed under this section, no credit under this section shall be allowed for that year until a copy of that certification is provided.

(D) All elections made by the taxpayer pursuant to Section 42 of the Internal Revenue Code, relating to low-income housing credit, shall apply to this section.

(E) (i) Except as described in clause (ii) or (iii), for buildings located in designated difficult development areas (DDAs) or qualified census tracts (QCTs), as defined in Section 42(d)(5)(B) of the Internal Revenue Code, relating to increase in credit for buildings in high-cost areas, credits may be allocated under this section in the amounts prescribed in subdivision (c), provided that the amount of credit allocated under Section 42 of the Internal Revenue Code, relating to low-income housing credit, is computed on 100 percent of the qualified basis of the building.

(ii) Notwithstanding clause (i), the California Tax Credit Allocation Committee may allocate the credit for buildings located in DDAs or QCTs that are restricted to having 50 percent of the building’s occupants be special needs households, as defined in the California Code of Regulations by the California Tax Credit Allocation Committee, even if the taxpayer receives federal credits pursuant to Section 42(d)(5)(B) of the Internal Revenue Code, relating to increase in credit for buildings in high-cost areas, provided that the credit allowed under this section shall not exceed 30 percent of the eligible basis of the building.

(iii) On and after January 1, 2018, notwithstanding clause (i), the California Tax Credit Allocation Committee may allocate the credit pursuant to paragraph (4) of subdivision (c) even if the taxpayer receives federal credits, pursuant to Section 42(d)(5)(B) of the Internal Revenue Code, relating to increase in credit for buildings in high-cost areas.

(F) (i) The California Tax Credit Allocation Committee may allocate a credit under this section in exchange for a credit allocated pursuant to Section 42(d)(5)(B) of the Internal Revenue Code, relating to increase in credit for buildings in high-cost areas, in amounts up to 30 percent of the eligible basis of a building if the credits allowed under Section 42 of the Internal Revenue Code, relating to low-income housing credit, are reduced by an equivalent amount.

(ii) An equivalent amount shall be determined by the California Tax Credit Allocation Committee based upon the relative amount required to produce an equivalent state tax credit to the taxpayer.

(c) Section 42(b) of the Internal Revenue Code, relating to applicable percentage: 70 percent present value credit for certain new buildings; 30 percent present value credit for certain other buildings, shall be modified as follows:

(1) In the case of any qualified low-income building that receives an allocation after 1989 and is a new building not federally subsidized, the term “applicable percentage” means the following:

(A) For each of the first three years, the percentage prescribed by the Secretary of the Treasury for new buildings that are not federally subsidized for the taxable year, determined in accordance with the requirements of Section 42(b)(2) of the Internal Revenue Code, relating to temporary minimum credit rate for nonfederally subsidized new buildings, in lieu of the percentage prescribed in Section 42(b)(1)(A) of the Internal Revenue Code.

(B) For the fourth year, the difference between 30 percent and the sum of the applicable percentages for the first three years.

(2) In the case of any qualified low-income building that receives an allocation after 1989 and that is a new building that is federally subsidized or that is an existing building that is “at risk of conversion,” the term “applicable percentage” means the following:

(A) For each of the first three years, the percentage prescribed by the Secretary of the Treasury for new buildings that are federally subsidized for the taxable year.

(B) For the fourth year, the difference between 13 percent and the sum of the applicable percentages for the first three years.

(3) For purposes of this section, the term “at risk of conversion,” with respect to an existing property means a property that satisfies all of the following criteria:

(A) The property is a multifamily rental housing development in which at least 50 percent of the units receive governmental assistance pursuant to any of the following:

(i) New construction, substantial rehabilitation, moderate rehabilitation, property disposition, and loan management set-aside programs, or any other program providing project-based assistance pursuant to Section 8 of the United States Housing Act of 1937, Section 1437f of Title 42 of the United States Code, as amended.

(ii) The Below-Market-Interest-Rate Program pursuant to Section 221(d)(3) of the National Housing Act, Sections 1715l(d)(3) and (5) of Title 12 of the United States Code.

(iii) Section 236 of the National Housing Act, Section 1715z-1 of Title 12 of the United States Code.

(iv) Programs for rent supplement assistance pursuant to Section 101 of the Housing and Urban Development Act of 1965, Section 1701s of Title 12 of the United States Code, as amended.

(v) Programs pursuant to Section 514 of the Housing Act of 1949, Section 1484 of Title 42 of the United States Code, as amended, and Section 515 of the Housing Act of 1949, Section 1485 of Title 42 of the United States Code, as amended.

(vi) The low-income housing credit program set forth in Section 42 of the Internal Revenue Code, relating to low-income housing credit.

(vii) Programs for loans or grants administered by the Department of Housing and Community Development.

(B) The restrictions on rent and income levels will terminate or the federally insured mortgage or rent subsidy contract on the property is eligible for prepayment or termination any time within five years before or after the date of application to the California Tax Credit Allocation Committee.

(C) The entity acquiring the property enters into a regulatory agreement that requires the property to be operated in accordance with the requirements of this section for a period equal to the greater of 55 years or the life of the property.

(D) The property satisfies the requirements of Section 42(e) of the Internal Revenue Code, relating to rehabilitation expenditures treated as separate new building, except that the provisions of Section 42(e)(3)(A)(ii)(I) shall not apply.

(4) On and after January 1,2018, in the case of any qualified low-income building that is (A) farmworker housing, as defined by paragraph (2) of subdivision (h) of Section 50199.7 of the Health and Safety Code, and (B) is federally subsidized, the term “applicable percentage” means for each of the first three years, 20 percent of the qualified basis of the building, and for the fourth year, 15 percent of the qualified basis of the building.

(d) The term “qualified low-income housing project” as defined in Section 42(c)(2) of the Internal Revenue Code, relating to qualified low-income building, is modified by adding the following requirements:

(1) The taxpayer shall be entitled to receive a cash distribution from the operations of the project, after funding required reserves, that, at the election of the taxpayer, is equal to:

(A) An amount not to exceed 8 percent of the lesser of:

(i) The owner equity that shall include the amount of the capital contributions actually paid to the housing sponsor and shall not include any amounts until they are paid on an investor note.

(ii) Twenty percent of the adjusted basis of the building as of the close of the first taxable year of the credit period.

(B) The amount of the cashflow from those units in the building that are not low-income units. For purposes of computing cashflow under this subparagraph, operating costs shall be allocated to the low-income units using the “floor space fraction,” as defined in Section 42 of the Internal Revenue Code, relating to low-income housing credit.

(C) Any amount allowed to be distributed under subparagraph (A) that is not available for distribution during the first five years of the compliance period may be accumulated and distributed any time during the first 15 years of the compliance period but not thereafter.

(2) The limitation on return shall apply in the aggregate to the partners if the housing sponsor is a partnership and in the aggregate to the shareholders if the housing sponsor is an “S” corporation.

(3) The housing sponsor shall apply any cash available for distribution in excess of the amount eligible to be distributed under paragraph (1) to reduce the rent on rent-restricted units or to increase the number of rent-restricted units subject to the tests of Section 42(g)(1) of the Internal Revenue Code, relating to in general.

(e) The provisions of Section 42(f) of the Internal Revenue Code, relating to definition and special rules relating to credit period, shall be modified as follows:

(1) The term “credit period” as defined in Section 42(f)(1) of the Internal Revenue Code, relating to credit period defined, is modified by substituting “four taxable years” for “10 taxable years.”

(2) The special rule for the first taxable year of the credit period under Section 42(f)(2) of the Internal Revenue Code, relating to special rule for 1st year of credit period, shall not apply to the tax credit under this section.

(3) Section 42(f)(3) of the Internal Revenue Code, relating to determination of applicable percentage with respect to increases in qualified basis after 1st year of credit period, is modified to read:

If, as of the close of any taxable year in the compliance period, after the first year of the credit period, the qualified basis of any building exceeds the qualified basis of that building as of the close of the first year of the credit period, the housing sponsor, to the extent of its tax credit allocation, shall be eligible for a credit on the excess in an amount equal to the applicable percentage determined pursuant to subdivision (c) for the four-year period beginning with the later of the taxable years in which the increase in qualified basis occurs.

(f) The provisions of Section 42(h) of the Internal Revenue Code, relating to limitation on aggregate credit allowable with respect to projects located in a state, shall be modified as follows:

(1) Section 42(h)(2) of the Internal Revenue Code, relating to allocated credit amount to apply to all taxable years ending during or after credit allocation year, does not apply and instead the following provisions apply:

The total amount for the four-year credit period of the housing credit dollars allocated in a calendar year to any building shall reduce the aggregate housing credit dollar amount of the California Tax Credit Allocation Committee for the calendar year in which the allocation is made.

(2) Paragraphs (3), (4), (5), (6)(E)(i)(II), (6)(F), (6)(G), (6)(I), (7), and (8) of Section 42(h) of the Internal Revenue Code, relating to limitation on aggregate credit allowable with respect to projects located in a state, do not apply to this section.

(g) The aggregate housing credit dollar amount that may be allocated annually by the California Tax Credit Allocation Committee pursuant to this section, Section 17058, and Section 23610.5 shall be an amount equal to the sum of all the following:

(1) Seventy million dollars ($70,000,000) for the 2001 calendar year, and, for the 2002 calendar year and each calendar year thereafter, seventy million dollars ($70,000,000) increased by the percentage, if any, by which the Consumer Price Index for the preceding calendar year exceeds the Consumer Price Index for the 2001 calendar year. For the purposes of this paragraph, the term “Consumer Price Index” means the last Consumer Price Index for All Urban Consumers published by the federal Department of Labor.

(2) The unused housing credit ceiling, if any, for the preceding calendar years.

(3) The amount of housing credit ceiling returned in the calendar year. For purposes of this paragraph, the amount of housing credit dollar amount returned in the calendar year equals the housing credit dollar amount previously allocated to any project that does not become a qualified low-income housing project within the period required by this section or to any project with respect to which an allocation is canceled by mutual consent of the California Tax Credit Allocation Committee and the allocation recipient.

(4) ~~Five~~ Except as provided in paragraph (6), five hundred thousand dollars ($500,000) per calendar year for projects to provide farmworker housing, as defined in subdivision (h) of Section 50199.7 of the Health and Safety Code.

(5) ~~The~~ Except as provided in paragraph (6), the amount of any unallocated or returned credits under former Sections 17053.14, 23608.2, and 23608.3, as those sections read prior to January 1, 2009, until fully exhausted for projects to provide farmworker housing, as defined in subdivision (h) of Section 50199.7 of the Health and Safety Code.

(6) No amount shall be provided for projects to provide farmworker housing used to comply with the requirement under Section 1188(c)(4) of Title 8 of the United States Code to furnish housing to H-2A workers.

(h) The term “compliance period” as defined in Section 42(i)(1) of the Internal Revenue Code, relating to compliance period, is modified to mean, with respect to any building, the period of 30 consecutive taxable years beginning with the first taxable year of the credit period with respect thereto.

(i) (1) Section 42(j) of the Internal Revenue Code, relating to recapture of credit, shall not be applicable and the provisions in paragraph (2) shall be substituted in its place.

(2) The requirements of this section shall be set forth in a regulatory agreement between the California Tax Credit Allocation Committee and the housing sponsor, and the regulatory agreement shall be subordinated, when required, to any lien or encumbrance of any banks or other institutional lenders to the project. The regulatory agreement entered into pursuant to subdivision (f) of Section 50199.14 of the Health and Safety Code, shall apply, provided that the agreement includes all of the following provisions:

(A) A term not less than the compliance period.

(B) A requirement that the agreement be recorded in the official records of the county in which the qualified low-income housing project is located.

(C) A provision stating which state and local agencies can enforce the regulatory agreement in the event the housing sponsor fails to satisfy any of the requirements of this section.

(D) A provision that the regulatory agreement shall be deemed a contract enforceable by tenants as third-party beneficiaries thereto and that allows individuals, whether prospective, present, or former occupants of the building, who meet the income limitation applicable to the building, the right to enforce the regulatory agreement in any state court.

(E) A provision incorporating the requirements of Section 42 of the Internal Revenue Code, relating to low-income housing credit, as modified by this section.

(F) A requirement that the housing sponsor notify the California Tax Credit Allocation Committee or its designee and the local agency that can enforce the regulatory agreement if there is a determination by the Internal Revenue Service that the project is not in compliance with Section 42(g) of the Internal Revenue Code, relating to qualified low-income housing project.

(G) A requirement that the housing sponsor, as security for the performance of the housing sponsor’s obligations under the regulatory agreement, assign the housing sponsor’s interest in rents that it receives from the project, provided that until there is a default under the regulatory agreement, the housing sponsor is entitled to collect and retain the rents.

(H) A provision that the remedies available in the event of a default under the regulatory agreement that is not cured within a reasonable cure period include, but are not limited to, allowing any of the parties designated to enforce the regulatory agreement to collect all rents with respect to the project; taking possession of the project and operating the project in accordance with the regulatory agreement until the enforcer determines the housing sponsor is in a position to operate the project in accordance with the regulatory agreement; applying to any court for specific performance; securing the appointment of a receiver to operate the project; or any other relief as may be appropriate.

(j) (1) The committee shall allocate the housing credit on a regular basis consisting of two or more periods in each calendar year during which applications may be filed and considered. The committee shall establish application filing deadlines, the maximum percentage of federal and state low-income housing tax credit ceiling that may be allocated by the committee in that period, and the approximate date on which allocations shall be made. If the enactment of federal or state law, the adoption of rules or regulations, or other similar events prevent the use of two allocation periods, the committee may reduce the number of periods and adjust the filing deadlines, maximum percentage of credit allocated, and the allocation dates.

(2) The committee shall adopt a qualified allocation plan, as provided in Section 42(m)(1) of the Internal Revenue Code, relating to plans for allocation of credit among projects. In adopting this plan, the committee shall comply with the provisions of Sections 42(m)(1)(B) and 42(m)(1)(C) of the Internal Revenue Code, relating to qualified allocation plan and relating to certain selection criteria must be used, respectively.

(3) Notwithstanding Section 42(m) of the Internal Revenue Code, relating to responsibilities of housing credit agencies, the California Tax Credit Allocation Committee shall allocate housing credits in accordance with the qualified allocation plan and regulations, which shall include the following provisions:

(A) All housing sponsors, as defined by paragraph (3) of subdivision (a), shall demonstrate at the time the application is filed with the committee that the project meets the following threshold requirements:

(i) The housing sponsor shall demonstrate there is a need and demand for low-income housing in the community or region for which it is proposed.

(ii) The project’s proposed financing, including tax credit proceeds, shall be sufficient to complete the project and that the proposed operating income shall be adequate to operate the project for the extended use period.

(iii) The project shall have enforceable financing commitments, either construction or permanent financing, for at least 50 percent of the total estimated financing of the project.

(iv) The housing sponsor shall have and maintain control of the site for the project.

(v) The housing sponsor shall demonstrate that the project complies with all applicable local land use and zoning ordinances.

(vi) The housing sponsor shall demonstrate that the project development team has the experience and the financial capacity to ensure project completion and operation for the extended use period.

(vii) The housing sponsor shall demonstrate the amount of tax credit that is necessary for the financial feasibility of the project and its viability as a qualified low-income housing project throughout the extended use period, taking into account operating expenses, a supportable debt service, reserves, funds set aside for rental subsidies and required equity, and a development fee that does not exceed a specified percentage of the eligible basis of the project prior to inclusion of the development fee in the eligible basis, as determined by the committee.

(B) The committee shall give a preference to those projects satisfying all of the threshold requirements of subparagraph (A) if both of the following apply:

(i) The project serves the lowest income tenants at rents affordable to those tenants.

(ii) The project is obligated to serve qualified tenants for the longest period.

(C) In addition to the provisions of subparagraphs (A) and (B), the committee shall use the following criteria in allocating housing credits:

(i) Projects serving large families in which a substantial number, as defined by the committee, of all residential units are low-income units with three or more bedrooms.

(ii) Projects providing single-room occupancy units serving very low income tenants.

(iii) Existing projects that are “at risk of conversion,” as defined by paragraph (3) of subdivision (c).

(iv) Projects for which a public agency provides direct or indirect long-term financial support for at least 15 percent of the total project development costs or projects for which the owner’s equity constitutes at least 30 percent of the total project development costs.

(v) Projects that provide tenant amenities not generally available to residents of low-income housing projects.

(4) For purposes of allocating credits pursuant to this section, the committee shall not give preference to any project by virtue of the date of submission of its application except to break a tie when two or more of the projects have an equal rating.

(k) Section 42(l) of the Internal Revenue Code, relating to certifications and other reports to secretary, shall be modified as follows:

The term “secretary” shall be replaced by the term “Franchise Tax Board.”

(l) In the case in which the credit allowed under this section exceeds the “tax,” the excess may be carried over to reduce the “tax” in the following year, and succeeding years if necessary, until the credit has been exhausted.

(m) The provisions of Section 11407(a) of Public Law 101-508, relating to the effective date of the extension of the low-income housing credit, apply to calendar years after 1993.

(n) The provisions of Section 11407(c) of Public Law 101-508, relating to election to accelerate credit, shall not apply.

(o) (1) For a project that receives a preliminary reservation under this section beginning on or after January 1, 2016, and before January 1, 2020, a taxpayer may make an irrevocable election in its application to the California Tax Credit Allocation Committee to sell all or any portion of any credit allowed under this section to one or more unrelated parties for each taxable year in which the credit is allowed subject to both of the following conditions:

(A) The credit is sold for consideration that is not less than 80 percent of the amount of the credit.

(B) The unrelated party or parties purchasing any or all of the credit pursuant to this subdivision is a taxpayer allowed the credit under this section for the taxable year of the purchase or any prior taxable year or is a taxpayer allowed the federal credit under Section 42 of the Internal Revenue Code, relating to low-income housing credit, for the taxable year of the purchase or any prior taxable year in connection with any project located in this state. For purposes of this subparagraph, “taxpayer allowed the credit under this section” means a taxpayer that is allowed the credit under this section without regard to the purchase of a credit pursuant to this subdivision.

(2) (A) The taxpayer that originally received the credit shall report to the California Tax Credit Allocation Committee within 10 days of the sale of the credit, in the form and manner specified by the California Tax Credit Allocation Committee, all required information regarding the purchase and sale of the credit, including the social security or other taxpayer identification number of the unrelated party or parties to whom the credit has been sold, the face amount of the credit sold, and the amount of consideration received by the taxpayer for the sale of the credit.

(B) The California Tax Credit Allocation Committee shall provide an annual listing to the Franchise Tax Board, in a form and manner agreed upon by the California Tax Credit Allocation Committee and the Franchise Tax Board, of the taxpayers that have sold or purchased a credit pursuant to this subdivision.

(3) (A) A credit may be sold pursuant to this subdivision to more than one unrelated party.

(B) (i) Except as provided in clause (ii), a credit shall not be resold by the unrelated party to another taxpayer or other party.

(ii) All or any portion of any credit allowed under this section may be resold once by an original purchaser to one or more unrelated parties, subject to all of the requirements of this subdivision.

(4) Notwithstanding any other law, the taxpayer that originally received the credit that is sold pursuant to paragraph (1) shall remain solely liable for all obligations and liabilities imposed on the taxpayer by this section with respect to the credit, none of which shall apply to a party to whom the credit has been sold or subsequently transferred. Parties that purchase credits pursuant to paragraph (1) shall be entitled to utilize the purchased credits in the same manner in which the taxpayer that originally received the credit could utilize them.

(5) A taxpayer shall not sell a credit allowed by this section if the taxpayer was allowed the credit on any tax return of the taxpayer.

(6) Notwithstanding paragraph (1), the taxpayer, with the approval of the Executive Director of the California Tax Credit Allocation Committee, may rescind the election to sell all or any portion of the credit allowed under this section if the consideration for the credit falls below 80 percent of the amount of the credit after the California Tax Credit Allocation Committee reservation.

(p) The California Tax Credit Allocation Committee may prescribe rules, guidelines, or procedures necessary or appropriate to carry out the purposes of this section, including any guidelines regarding the allocation of the credit allowed under this section. Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code shall not apply to any rule, guideline, or procedure prescribed by the California Tax Credit Allocation Committee pursuant to this section.

(q) This section shall remain in effect for as long as Section 42 of the Internal Revenue Code, relating to low-income housing credit, remains in effect.

SEC. 21.

Section 17058 of the Revenue and Taxation Code is amended to read:

17058.

(a) (1) There shall be allowed as a credit against the “net tax,” defined in Section 17039, a state low-income housing tax credit in an amount equal to the amount determined in subdivision (c), computed in accordance with Section 42 of the Internal Revenue Code, relating to low-income housing credit, except as otherwise provided in this section.

(2) “Taxpayer,” for purposes of this section, means the sole owner in the case of an individual, the partners in the case of a partnership, and the shareholders in the case of an “S” corporation.

(3) “Housing sponsor,” for purposes of this section, means the sole owner in the case of an individual, the partnership in the case of a partnership, and the “S” corporation in the case of an “S” corporation.

(A) The low-income housing project shall be located in California and shall meet either of the following requirements:

(i) Except for projects to provide farmworker housing, as defined in subdivision (h) of Section 50199.7 of the Health and Safety Code, that are allocated credits solely under the set-aside described in subdivision (c) of Section 50199.20 of the Health and Safety Code, the project’s housing sponsor has been allocated by the California Tax Credit Allocation Committee a credit for federal income tax purposes under Section 42 of the Internal Revenue Code, relating to low-income housing credit.

(ii) To the extent the allocation of the credit to a partner under this section lacks substantial economic effect, any loss or deduction otherwise allowable under this part that is attributable to the sale or other disposition of that partner’s partnership interest made prior to the expiration of the federal credit shall not be allowed in the taxable year in which the sale or other disposition occurs, but shall instead be deferred until and treated as if it occurred in the first taxable year immediately following the taxable year in which the federal credit period expires for the project described in clause (i).

(iii) This subparagraph shall not apply to a project that receives a preliminary reservation of state low-income housing tax credits under the set-aside described in subdivision (c) of Section 50199.20 of the Health and Safety Code unless the project also receives a preliminary reservation of federal low-income housing tax credits.

(2) (A) The California Tax Credit Allocation Committee shall certify to the housing sponsor the amount of tax credit under this section allocated to the housing sponsor for each credit period.

(B) In the case of a partnership or an “S” corporation, the housing sponsor shall provide a copy of the California Tax Credit Allocation Committee certification to the taxpayer.

(D) All elections made by the taxpayer pursuant to Section 42 of the Internal Revenue Code, relating to low-income housing credit, apply to this section.

(iii) On and after January 1, 2018, notwithstanding clause (i), the California Tax Credit Allocation Committee may allocate the credit pursuant to paragraph (5) of subdivision (c) even if the taxpayer receives federal credits, pursuant to Section 42(d)(5)(B) of the Internal Revenue Code, relating to increase in credit for buildings in high-cost areas.

(ii) An equivalent amount shall be determined by the California Tax Credit Allocation Committee based upon the relative amount required to produce an equivalent state tax credit to the taxpayer.

(1) In the case of any qualified low-income building placed in service by the housing sponsor during 1987, the term “applicable percentage” means 9 percent for each of the first three years and 3 percent for the fourth year for new buildings (whether or not the building is federally subsidized) and for existing buildings.

(2) In the case of any qualified low-income building that receives an allocation after 1989 and is a new building not federally subsidized, the term “applicable percentage” means the following:

(B) For the fourth year, the difference between 30 percent and the sum of the applicable percentages for the first three years.

(3) In the case of any qualified low-income building that receives an allocation after 1989 and that is a new building that is federally subsidized or that is an existing building that is “at risk of conversion,” the term “applicable percentage” means the following:

(A) For each of the first three years, the percentage prescribed by the Secretary of the Treasury for new buildings that are federally subsidized for the taxable year.

(B) For the fourth year, the difference between 13 percent and the sum of the applicable percentages for the first three years.

(4) For purposes of this section, the term “at risk of conversion,” with respect to an existing property means a property that satisfies all of the following criteria:

(A) The property is a multifamily rental housing development in which at least 50 percent of the units receive governmental assistance pursuant to any of the following:

(ii) The Below-Market-Interest-Rate Program pursuant to Section 221(d)(3) of the National Housing Act, Sections 1715l(d)(3) and (5) of Title 12 of the United States Code.

(iii) Section 236 of the National Housing Act, Section 1715z-1 of Title 12 of the United States Code.

(iv) Programs for rent supplement assistance pursuant to Section 101 of the Housing and Urban Development Act of 1965, Section 1701s of Title 12 of the United States Code, as amended.

(vi) The low-income housing credit program set forth in Section 42 of the Internal Revenue Code, relating to low-income housing credit.

(vii) Programs for loans or grants administered by the Department of Housing and Community Development.

(5) On and after January 1, 2018, in the case of any qualified low-income building that is (A) farmworker housing, as defined by paragraph (2) of subdivision (h) of Section 50199.7 of the Health and Safety Code, and (B) is federally subsidized, the term “applicable percentage” means for each of the first three years, 20 percent of the qualified basis of the building, and for the fourth year, 15 percent of the qualified basis of the building.

(1) The taxpayer shall be entitled to receive a cash distribution from the operations of the project, after funding required reserves, that, at the election of the taxpayer, is equal to:

(A) An amount not to exceed 8 percent of the lesser of:

(i) The owner equity, which shall include the amount of the capital contributions actually paid to the housing sponsor and shall not include any amounts until they are paid on an investor note.

(ii) Twenty percent of the adjusted basis of the building as of the close of the first taxable year of the credit period.

(e) The provisions of Section 42(f) of the Internal Revenue Code, relating to definition and special rules relating to credit period, shall be modified as follows:

(2) The special rule for the first taxable year of the credit period under Section 42(f)(2) of the Internal Revenue Code, relating to special rules for 1st year of credit period, shall not apply to the tax credit under this section.

If, as of the close of any taxable year in the compliance period, after the first year of the credit period, the qualified basis of any building exceeds the qualified basis of that building as of the close of the first year of the credit period, the housing sponsor, to the extent of its tax credit allocation, shall be eligible for a credit on the excess in an amount equal to the applicable percentage determined pursuant to subdivision (c) for the four-year period beginning with the taxable year in which the increase in qualified basis occurs.

(f) The provisions of Section 42(h) of the Internal Revenue Code, relating to limitation on aggregate credit allowable with respect to projects located in a state, shall be modified as follows:

(g) The aggregate housing credit dollar amount that may be allocated annually by the California Tax Credit Allocation Committee pursuant to this section, Section 12206, and Section 23610.5 shall be an amount equal to the sum of all the following:

(2) The unused housing credit ceiling, if any, for the preceding calendar years.

(i) Section 42(j) of the Internal Revenue Code, relating to recapture of credit, shall not be applicable and the following requirements of this section shall be set forth in a regulatory agreement between the California Tax Credit Allocation Committee and the housing sponsor, and the regulatory agreement shall be subordinated, when required, to any lien or encumbrance of any banks or other institutional lenders to the project. The regulatory agreement entered into pursuant to subdivision (f) of Section 50199.14 of the Health and Safety Code shall apply, provided that the agreement includes all of the following provisions:

(1) A term not less than the compliance period.

(2) A requirement that the agreement be recorded in the official records of the county in which the qualified low-income housing project is located.

(3) A provision stating which state and local agencies can enforce the regulatory agreement in the event the housing sponsor fails to satisfy any of the requirements of this section.

(4) A provision that the regulatory agreement shall be deemed a contract enforceable by tenants as third-party beneficiaries thereto and that allows individuals, whether prospective, present, or former occupants of the building, who meet the income limitation applicable to the building, the right to enforce the regulatory agreement in any state court.

(5) A provision incorporating the requirements of Section 42 of the Internal Revenue Code, relating to low-income housing credit, as modified by this section.

(6) A requirement that the housing sponsor notify the California Tax Credit Allocation Committee or its designee if there is a determination by the Internal Revenue Service that the project is not in compliance with Section 42(g) of the Internal Revenue Code, relating to qualified low-income housing project.

(7) A requirement that the housing sponsor, as security for the performance of the housing sponsor’s obligations under the regulatory agreement, assign the housing sponsor’s interest in rents that it receives from the project, provided that until there is a default under the regulatory agreement, the housing sponsor is entitled to collect and retain the rents.

(8) A provision that the remedies available in the event of a default under the regulatory agreement that is not cured within a reasonable cure period include, but are not limited to, allowing any of the parties designated to enforce the regulatory agreement to collect all rents with respect to the project; taking possession of the project and operating the project in accordance with the regulatory agreement until the enforcer determines the housing sponsor is in a position to operate the project in accordance with the regulatory agreement; applying to any court for specific performance; securing the appointment of a receiver to operate the project; or any other relief as may be appropriate.

(i) The housing sponsor shall demonstrate that there is a need and demand for low-income housing in the community or region for which it is proposed.