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California Tax Credit Allocation Committee Update

California Tax Credit Allocation Committee Update. William Pavão Executive Director Lisa Vergolini Deputy Director DC Navarrette Regional Analyst. Topics. Update of 2014 Results and Trends New Construction vs. Rehab Trends Updated Credit Pricing

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California Tax Credit Allocation Committee Update

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

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

  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)

  4. Trend: Applications and Awards

  5. 2014 Awards and Waiting List cont. • Average project size: 58 units (62 in 2013) A • Average TDC: $19.5M ($18.5M in 2013) • Average 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)

  6. 2014ProjectSize

  7. Trend: Federal Credits Per Unit

  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

  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)

  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

  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

  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)

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

  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)

  15. New Construction vs. Rehab Trends: Projects

  16. NewConstructionvs. Rehab Trends: Credits

  17. Resyndications: Projects

  18. Resyndications:Federal Credits

  19. Credit PricingFirst 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 8projects (18%) • $0.95 - $0.99 11 projects (25%) • $0.90 - $0.94 5projects (11%) • $0.89* 1 project (2%) *San Jacinto, CA

  20. 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

  21. 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

  22. 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

  23. Cost Study: The Sample

  24. Costs by Construction Start Date

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

  26. Costs by Construction Start Date

  27. Average Cost by Other Characteristics

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

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

  30. 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%)

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

  32. 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

  33. 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

  34. 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

  35. 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.

  36. 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

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