To incentivize private capital to invest in affordable housing development and preservation, the federal government allows a certain amount of private market capital to be exempt from income taxes – though tax credits and tax exemptions – if invested in qualified affordable housing projects. The California Debt Limit Allocation Committee (CDLAC) is a state agency, overseen by the State Treasurer, charged with administering the tax-exempt private activity bond program available annually for California. CDLAC allocates federally tax-exempt bonds – known as 4-Percent Credits – that can be used for multi-family housing development and preservation.

The California Debt Limit Allocation Committee is a three-member body comprised of the State Treasurer as Chair, the Governor, and the State Controller.

Background:

Federal law limits how much tax-exempt debt a state can issue in a calendar year for private projects that have a qualified public benefit, such as affordable housing. This cap is determined by a population-based formula. CDLAC was created to set and allocate California’s annual debt ceiling, currently set with a debt ceiling of over $4 billion, based on the state population of approximately 40 million people. CDLAC’s programs are used to finance affordable housing developments using a layer of capital known as 4-Percent Credits.

Similarly, the State’s Tax Credit Allocation Committee (TCAC) administers the federal and state Low-Income Housing Tax Credit Programs, awarding the 9-Percent Credits to developers of affordable housing projects.

Additional background can be found here.