2020 Competitive CDLAC 4% Application and Market Study Changes

For the first time since 2003-2004, the State of California Debt Limit Allocation Committee (or CDLAC) will implement 4% low-income tax credits and tax-exempt bond allocations in 2020 on a competitive basis as the annual volume cap is anticipated to be oversubscribed. For the first time in over 15 years, the November 15, 2019, 4% application deadline implemented competitive allocations based on a ranked scoring system. All four CDLAC application deadlines in 2020 will also issue allocations on a competitive system. CDLAC’s volume cap was $4.153B in 2019 and a slight increase is anticipated for the 2020 cap, although the exact volume cap will not be determined until the January 15, 2020 State Ceiling meeting. According to Muri Bartkovsky, a Program Manager at CDLAC, there was a $500M oversubscription in 4% tax-credits in 2019. Based on an internal CDLAC Demand Survey in August 2019, approximately $9.1B in demand allocations is anticipated in 2020. The projected $4.2B in oversubscription allocations further illustrates California’s continued and worsening affordable housing crisis.

Unlike 9% tax credits, which have always implemented a competitive allocation system based on a ranked scoring system, it is now imperative to maximize points under CDLAC’s new 4% competitive system. In November 2019, CDLAC announced two policies that will impact eligible points from the required Market Study. First, projects will now be eligible for a maximum of 10 points if all affordable unit types are at least 20% below market-rate rental rates. Secondly, the projects will be eligible for additional points based on the development’s proximity to certain site amenities.