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 Tax Credit Allocation Committee (CTCAC), overseen and based within California’s State Treasurer Office, administers the federal and state Low-Income Housing Tax Credit Programs.

Credits are available for new construction projects or existing properties undergoing rehabilitation. Two types of federal tax credits are available and are generally referred to as nine percent (9%) federal Low Income Housing Tax Credits and and four percent (4%) credits. TCAC awards the 9-Percent Credits to developers; a related state agency, the California Debt Limit Allocation Committee (CDLAC – go to page), allocates the 4% Credits.

In 2018, TCAC awarded $109.9 million in competitive 9-Percent Federal Low-Income Housing Tax Credits to 70 proposed housing projects and induced $1.1 billion in private equity investment into the projects, which developed 4,143 affordable housing units.

Additional reading: ABC’s of State Agencies.