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California Tax Credit Allocation Committee Update William Pavo Executive Director Lisa Vergolini Deputy Director DC Navarrette Regional Analyst 1

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Topics Update of 2014 Results and Trends New Construction vs. Rehab Trends Updated Credit Pricing 2015 Regulation Changes and Proposals Cost Study 2

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3 2014 Results Total awards: 80 after Round 2, plus 4-5 more likely from a waiting list 49% of applicants (84 awards in 2013) ~ $91 million in annual federal credit ($89M in 2013) ~$101 million in total state credit ($77.7M in 2013)

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Trend: Applications and Awards 4

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2014 Awards and Waiting List cont. Average project size: 58 units (62 in 2013) A Average TDC: $19.5M ($18.5M in 2013) A verage federal credit award: $1.1M ($1M in 2013) Average public contribution: $5.7M ($5.7M in 2013) 29.7% of TDC (30.7% in 2013) 5

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2014 Project Size Units # of Projects % of Total 0 2467% 25 492934% 50 743035% 75 991214% 100+810% 6

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Trend: Federal Credits Per Unit 7

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8 2014 State Credits Available: $105.1 million* 9% projects: $88.3 million 4% projects: $15.6 million Awarded: $115.5 million 9% projects: $101 million 4% projects: $14.5 million Reaching into 2015: $10.4 million

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9 2014 State and 9% Credits 2014: 30 awards, $101 million in State credit No state credit exchange (SCE) 2013: 23 awards, $63 million 7 SCE, $18.7 million $77.7 million total Average per project award 2014: $3.3 million (24% increase over 2013 - $2.7 million)

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10 2014 Special Needs Projects with State Credits Nine of 30 State credit awards are Special Needs housing type projects In 2013, only one of 29 were Special Needs projects

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11 2014 Special Needs Projects with State Credits cont. Twelve Special Needs awards total Nine requested State credits Six DDA/QCT projects also requested State credits Three non-DDA/QCT projects received 130% federal basis boost along with State credits

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12 2014 4% plus State Credits 21 four percent-plus-State applications (8 in 2013) $15.6 million available for 2014 8 awards (7 in 2013) $14.5 million in State credit ($9 million in 2013)

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13 2014 Native American Apportionment Three applicants (Bishop, Hoopa, and Washoe tribes) Two awards R1: Bishop Paiute (New Construction, Large Family) R2: Trinity River Elders Village (New Construction, Seniors) Points scores: 148, 140 respectively

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14 2014 Native American Apportionment TDC: $11.9M (30 units) and $4.1M (12 units) Public funds: NAHASDA ($1.7M and $915K) Federal Credit: $885K and $388K State Credit: $3.5M (R1 Bishop Paiute Project)

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15 New Construction vs. Rehab Trends: Projects

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16 New Construction vs. Rehab Trends: Credits

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17 Resyndications: Projects

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18 Resyndications: Federal Credits

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Credit Pricing First Round 2014 Letters of Intent (September 2014) 46 projects total - 9% and 4% + State $1.10 - $1.17 14 projects (31%) $1.05 - $1.09 6 projects (13%) $1 - $1.04 8 projects (18%) $0.95 - $0.99 11 projects (25%) $0.90 - $0.94 5 projects (11%) $0.89* 1 project (2%) *San Jacinto, CA 19

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2014 Regulations Changes for 2015 Accessibility Thresholds CBC Chapter 11(B) applicable in 2014 5% with mobility features, 2% with sensory features 2015: 10% with mobility features, 4% with sensory features Lease up priority for accessible units to households who need them 20

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2014 Regulations Changes for 2015 Senior Housing Type 62+ age standard 50 percent of all units on an accessible path must be developed to California Building Code Chapter 11(B) standards 21

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2015 Regulation Change Proposals Retain 2008 California Building Code, Title 24, Part 6 calibration Add Zero Net Energy (ZNE) option for scoring and threshold Permit larger maximum developer fee in project cost and basis for 4% new construction projects of 150 units or more 22

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Cost Study: The Sample ProjectsDescription 995New construction projects awarded tax credits between 1999-2010 and placed in service by February 2012 430565 projects were excluded because they did not receive a survey response from the Developer Survey. 40030 projects were excluded from the final analysis data set due to missing or incomplete TCAC files or other data issues. 400Final analysis data set contained 400 projects.

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Costs by Construction Start Date 24

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Key Points 2011: Only two projects Constant dollar expression 2002-2009: + $108K per unit increase 2002-2005: + $87K per unit increase 25

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Costs by Construction Start Date 26

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Average Cost by Other Characteristics 27

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Key Findings: 1. Local Factors Local reviews and sources added costs: Community opposition (5 percent) Design review changes (6 percent) Redevelopment projects (7 percent) 28

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2. Parking Podium or subterranean parking (6 percent) Relative to surface or other parking 29

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3. Developer Factors Larger developers may correlate with cost efficiency Developers with licensed general contractor on staff may correlate with cost efficiency Quality/durability correlate with cost (15%) 30

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Measuring Quality Roofing: 10-; 15-; or 20-year warranty 92% reported 20-year Exteriors: Stained plywood; fiber cement siding; or stucco 80% reported stucco 31

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Quality cont. Windows: Aluminum sliders; vinyl, PVC, or casement; or wood clad casement 91% reported vinyl, PVC, or casement Flooring: vinyl tile; sheet linoleum; or ceramic tile 73% reported sheet linoleum 32

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Quality cont. Bath tubs: fiberglass; enameled steel; or enameled cast iron 92% reported fiberglass Counter tops: plastic laminate; synthetic or ceramic tile; stone 70% reported plastic laminate 33

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4. Economies of Scale 10% increase in unit count correlates with a 1.7% decrease in per-unit cost Example: Taking 60 units to 66 units could reduce $300,000 units to $295,000 $18M becomes a $19.5M cost 34

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5. Unit Type Smaller units cost less Example: SRO units cost 31% less than large family units Senior units cost 18% less than large family units Taller (4+ floors) cost 10% more $28K more per unit than 1-3 floor bldgs. 35

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6. Land Costs Land features affect building height, parking configurations, staging, as well as acquisition costs Podium parking 6% more expensive per unit than projects without podium parking Approximately $17K/unit additional cost 36

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