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CTCAC Proposes Hybrid Structure for Second-Round Awardees

Monday, February 6, 2017 - 1:30PM

The California Tax Credit Allocation Committee (CTCAC) Friday proposed allowing second-round 2016 low-income housing tax credit (LIHTC) awardees to seek permission to convert their developments to a hybrid 9 percent/4 percent structure due to uncertainty in the LIHTC equity market. This comes after the CTCAC earlier proposed the same option for 2016 first-round awardees, then concluded that insufficient time remained for restructuring for the few that hadn’t already closed. Second-round awardees who seek to restructure must submit a revised 9 percent application and a new 4 percent application to CTCAC and a new bond allocation application to the California Debt Limit Allocation Committee (CDLAC) by March 13. CTCAC also extended the readiness closing deadlines for all 2016 second-round awardees to either two months after the reservation letter or June 30. Due to the complexity of the hybrid structure, CTCAC will allow sponsors to return their 2016 credit reservation without negative points and reapply for 9 percent credits at a higher amount.

A Notes from Novogradac blog post discusses the complexities of a hybrid structure, the challenges and how it might be structured.

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