Last week, the California Debt Limit Allocation Committee (CDLAC) discussed and approved several decisions related to the tie-breaker framework. The committee voted to approve tie-breaker principle and value criteria that will need to be drafted and approved prior to taking effect in round 2 and 3 of 2022. Generally, we believe these updates to the tie-breaker will increase the affordability of projects awarded, giving non-profit affordable housing developers an edge in the tie-breaker stage.
No definitive time-table was provided for final approvals; however, we expect drafted regulations will go to public comment in mid-January. Prior to that, CDLAC will reconvene on December 22nd to discuss pools and set aside allocations for the $3.7B earmarked for the Qualified Residential Rental Project (QRRP) Private Activity Bond (PAB) volume cap.
CDLAC reviews and considers policies annually. These policies guide the committee regarding how to allocate available affordable housing funds. The tie-breaker framework is an example of those policies. It applies to project applications that are competitive and have similar (tie) project scores. In these cases, the tie-breaker framework is applied to assess projects and prioritize funding allocations.
SV@Home is committed to advocating for policies and methodologies that mitigate potential bias in scoring and communicating how updates can impact our members pipelines and future projects. As the process is complex and time-consuming, we are coordinating with NPH and affordable housing developers to track these vital changes.
Adopted changes will affect how CDLAC allocates funds after round 1. A summary of adopted tie-breaker updates details is provided below (CDLAC, Proposed Tie-Breaker Calculations and Values):
- Where Public Benefit:
- Production: Adjusted Units Produced at 80% AMI or Below.
- Rent Savings: Project Rent Savings relative to County Fair Market Rent where restricted rents x 15 years with a 40% AMI floor for non-rental assistance and 30% AMI floor for rental assisted units (e.g. PBV) applies.
- Population: Focus on Extremely-low and Homeless or Veterans or Other Special Needs (Non-Homeless or Non-Veteran).
- Location: Agreed to work with HCD for a better definition of Community Revitalization Area, lower applicable values for transit and walkability to avoid duplicating in scoring and tie-breaker, and remove values after a 50% cap for High Resource Areas is achieved in scoring; however, that cap does not apply for the tie-breaker.
- Where Resources Measured:
- Tax-Exempt Bonds: Recycled bonds kept in leverage category; however, some appetite to get rid of category all together as questions regarding ‘public benefit’ were discussed. Intent is not to push affordable developers to find alternative, term heavy, financing.
- State Tax Credits: No update
- Adjustments:
- Prevailing wages: Increased value
- TCAC Basis Delta: Reduced and removed the cap
Refer to the CDLAC Recap of Tie-Breaker Framework document for specific number changes.
SV@Home will continue to advocate, monitor, and communicate updates as CDLAC makes decisions that can impact your current and future affordable projects.