California Reinstates Bifurcation, Institutes Certification

Tuesday, June 28, 2016 - 3:45PM

California Gov. Jerry Brown signed SB 837 into law yesterday, making two key changes relating to state low-income housing tax credits (LIHTCs). The bill restores the ability to bifurcate the state credits–allowing different parties to invest in the state and federal credits–after that option expired in 2015. The bill also creates a new authority to certificate state credits, meaning they can be sold outright to a state investor rather than requiring the investor to be a partner. There are some restrictions on that option, including a requirement that the applicant make an irrevocable election in its initial application, that pricing must be at least 80 cents on the dollar and that the investor must be or have been a traditional investor in a federal tax credit for any other tax credit transaction in California. Both changes are for reservations made prior to Jan. 1, 2020 and the certification begins with 2017 reservations.

Learn more about Novogradac's expertise and many services